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Tencent (700.HK) inked a deal with Universal Music that will boost the social media giant’s position as the biggest provider of music streaming services in China.
That follows on from Shenzhen-based Tencent penning similar deals with record labels Warner Music and Sony to stream Western popular music in the world’s second-biggest economy. The multi-year deal will also see the two build a version of London’s iconic Abbey Road Studios in China.
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Could music be the next revenue driver for Tencent? The company has three streaming platforms in QQ Music, KuGuo and Kuwo. However, these only have 15 million paying users out of a total user base of 600 million for Tencent’s WeChat social network. Its success in hoovering up more paid subscribers could be hard: Music piracy is still rampant in China, while Western music generally plays second-fiddle to local artists.
Anyways, here’s a quote from Cussion Pang, head of Tencent’s music biz:
Leveraging UMG’s resources and our distribution capabilities, we can provide a rich and personalized experience to hundreds of millions of music lovers in China. This strategic agreement will further strengthen our efforts in copyright protection and shift the industry towards the paid subscription model.
Tencent’s stock has been the rock star of the MSCI China this year, having returned 37% since January 1. However, the stock is starting to look a bit pricey at 36 times next 12 months’ earnings.
May 17, 2017 at 09:23AM
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from Daniel Shane
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