On March 19th, Tencent Music Entertainment Group (TME) released its financial reports for the fourth quarter and full year of 2023. The financial report shows that in the fourth quarter, Tencent Music's online music service revenue grew strongly, with online music subscription revenue of 3.42 billion yuan, a year-on-year increase of 45.3%. Overall, it continued to maintain stable and high-quality growth, with core performance indicators exceeding market expectations. At the user data level, the number of online music paying users increased by 20.6% year-on-year, reaching 106.7 million.
In 2023, Tencent Music's strategy focuses on strong performance in its online music business, with a healthier and more resilient business structure. Behind the trend of high-quality development is the strong synergistic effect generated by the combination of content ecology, platform construction, and AIGC empowerment. Integration enhances efficiency, while innovation accelerates. TME's long-term investment not only achieves its own performance growth, but also enters a new stage of high-quality development together with the industry.
Continuous improvement of content ecology, rooted in the deep value of the industry
For the digital music industry, allowing users to experience and listen to more high-quality music content is essential for them to have a better music consumption experience, thereby further driving the growth of online music consumption and paying users. This quarter, Tencent Music has continuously strengthened its content coverage advantages and attractiveness, produced co created differentiated content, and deeply explored the diverse value of content. The content ecosystem has become more prosperous, and its deepening of content strategy has built a solid foundation for its own and industry's long-term value release.
TME is always committed to providing users with the most comprehensive and extensive music content. On the one hand, we will continue to deepen our cooperation with well-known record companies and artists, further expanding our industry influence and content appeal. As of the end of 2023, TME Music Library has over 200 million music and audio tracks. This quarter, in addition to successfully renewing a multi-year cooperation agreement with Universal Music Group, TME has brought various benefits such as top-notch music libraries and higher sound quality to paying users. In addition, its further cultivation in sub sectors such as pop, rock, and Chinese style has also brought more choices to more young consumer groups.
In terms of content production and co creation, TME's strength continues to strengthen, continuously enhancing the supply of differentiated content. In 2023, with the support of TME's diversified support capabilities, the TME Musicians Open Platform efficiently introduced medium to long tail differentiated content, and over 480000 independent musicians released over 3 million songs of various styles on the platform. In addition, TME has a total of 10 songs, including "She Under the Light", "Up the Spring Mountain", "Why Not Meet One Side", and "Dragon", which will appear at the 2024 CCTV Spring Festival Gala. This quarter, with the help of TME, strategic partner artist Yuan Yawei released a new album "In the Imbalance of Birth", and strategic partner artist music singer and songwriter Liu Lian released a high-quality jazz style EP "Don't Speak, Just Kiss". TME has always been committed to further promoting the career development of artists through excellent planning and precise promotion.
In addition, TME continuously explores the vitality of music content, delves into the diverse value of content, and expands the growth space for the industry. With the booming recovery of music performance activities in 2023, TME seized the opportunity to build a multi product and multi form layout in its performance business, and held various offline music festivals and tour activities. In the fourth quarter, TME assisted top overseas DJ musician Alan Walker in carrying out a six city tour in China. Through comprehensive services such as fan economy, ticketing sales, and performance brokerage, TME created customized music scenes for musicians and brought extraordinary interactive experiences to audiences.
TME serves paying users, fans, and the general public by continuously expanding content, exploring high-quality music works and musicians, and creating, producing, and promoting high-quality works, thereby continuously expanding the long-term growth space of music value.
Technological innovation+AI empowerment, tapping into the growth potential of the music market
After nearly a decade of rapid development, digital music has entered a new stage of ecological development. The integration of industries such as multiple scenes, boundaries, refinement, and differentiation has widened the new boundaries of China's music industry. The size and potential of the entire market cannot be underestimated.
Content is the foundation of user payment, while experience is the key to determining whether users can continue to pay. Based on this, TME, with a deep understanding of users and content, empowers its business through platform innovation and layout of AIGC technology, launches many new functions, and continuously innovates its audio and video entertainment experience through "black technology". Among them, enriching rights and multi end experiences, enhancing platform value, empowering business with AIGC, and enhancing product attractiveness are the means for TME to solve the problem.
In terms of expanding user privileges, TME has industry-leading high-quality sound quality and rich sound effects, as well as personalized skins, players, and music interactive gameplay that better suit user music preferences, effectively enhancing user conversion retention. At present, TME has accumulated the largest Dolby panoramic sound music library in China, providing users with a more immersive listening experience. Dolby panoramic sound music services have successfully landed on mobile, in car, and PC platforms, achieving comprehensive coverage in different application scenarios. In the fourth quarter, Tencent Music collaborated with Jay Chou's "Christmas Star" single to launch interactive gameplay such as guessing songs and AI sound magicians. They also released exclusive super premieres with over 4 million pre arranged viewers to enjoy the MV, bringing good user activity and playback performance.
In terms of upgrading the multi end experience, new features have been added on the APP end, and the experience has been upgraded on the car end. In December 2023, TME's QQ Music underwent a year-end major version upgrade, with new features such as simpler UI interaction and virtual record shelves, enhancing user engagement while receiving high praise from users. On the car side, TME continuously upgrades the cabin music and entertainment experience in terms of user interaction, content, and listening experience. For example, Kugou's Viper All Scene Soundtrack Library has fully debuted on the car end, bringing users a higher quality listening experience.
In addition, TME actively embraces the AI craze, empowering businesses through AIGC to improve efficiency, enrich product gameplay and functions, and make content discovery and use more intelligent and personalized. TME integrates the Large Language Model (LLM) into music listening scenarios, upgrades virtual DJ functionality, and helps users discover their favorite songs faster; The national karaoke platform has launched an "AI singing" function, which can be easily performed in various languages and styles. The "opera singing golden songs" also brings a new cover experience. At the same time, Tencent Music Qimingxing has launched an AI composition assistant, which assists creators in music creation by inputting original text descriptions or melody fragments.
On the platform side, TME continuously upgrades its product functions, providing users with more personalized music and entertainment services, stimulating platform content production and innovation, enhancing user stickiness, and improving user activity and payment rates. Technological progress is clearly driving the upgrading and development of the music industry.
Tencent Music has been running on the slow and long snow road of music consumption for over a decade, accumulating strong momentum through continuous and firm investment, and ultimately triggering a "flywheel effect" of its own and industry growth. It is not easy to cultivate industries from scratch and from few to many, but once the embryonic form of a composite industry chain of content, platform, and technology is formed, the "flywheel" of the industry will turn faster and further, and will deeply transform the direction of the music industry. The financial report of Tencent Music demonstrates not only the patience of long-term investment, but also the confidence to lead the music industry in continuously creating long-term value. Tencent Music Entertainment Group and the Chinese online music market behind it still have huge growth potential.