That beat expectations of RMB 7.27 billion, according to a survey of analysts\u2019 expectations from LSEG, as cited by<\/a> Reuters<\/em>.<\/p>\n Of that total, RMB 4.22 billion<\/strong> ($581 million<\/strong>) came from music streaming subscriptions, an increase of 16.6%<\/strong><\/span> from the same quarter a year earlier.<\/p>\n The growth in subscription revenue was driven by both an increase in ARPPU (average revenue per paying user) and by an 8.3% YoY<\/strong><\/span> increase in the number of paying users, reaching 122.9 million<\/strong>.<\/p>\n ARPPU rose 7.5% YoY<\/strong><\/span> to RMB 11.4<\/strong> ($1.57<\/strong>) from RMB 10.6<\/strong> a year earlier. TME attributed the growth to the increasing popularity of its Super VIP (SVIP) subscription tier, which costs five times as much<\/a> as a standard paid subscription, as well as to \u201cmore disciplined promotional activities.\u201d<\/p>\n The growing success of TME\u2019s Super VIP tier comes amid reports that the long-awaited \u201cMusic Pro\u201d tier at Spotify<\/strong>, which could prove to be a major boost to music rightsholders\u2019 incomes, could land as soon as this year<\/a>.<\/p>\n In its Q1 earnings report released on Tuesday (May 13), TME offered some insights into which features have proven to be magnets for SVIP subscriptions. Key among them is premium audio quality, which TME says is used by about 50%<\/strong> of SVIP subscribers.<\/p>\n Other features driving SVIP adoption include album discounts, special badges, early access to live events, and merchandise, TME said.<\/p>\n The company also noted that long-form audio content \u201cboosted SVIP retention,\u201d noting that an audio adaptation of the hit fantasy book series The Grave Robbers\u2019 Chronicles<\/em> became the fastest series to surpass 10 million streams<\/strong> on TME\u2019s platforms.<\/p>\n TME operates QQ Music<\/strong> (its flagship streaming app) along with Kugou<\/strong>, Kuwo<\/strong>, and karaoke app WeSing<\/strong>.<\/p>\n The growth in TME\u2019s music subscription segment was partly offset by continuing declines in its social entertainment division, which has seen several years of shrinking revenues due to a crackdown on online gambling by the Chinese government.<\/p>\n Social entertainment revenues fell 11.9% YoY<\/strong><\/span> to RMB 1.55 billion<\/strong> ($214 million<\/strong>) in Q1, TME said.<\/p>\n The company reported an operating profit of RMB 4.84 billion<\/strong> ($666 million<\/strong>) in Q1, a 146.9% YoY<\/strong><\/span> increase. Net profit nearly tripled to RMB 4.39 billion<\/strong> ($605 million<\/strong>).<\/p>\n “We’re encouraged by the continued rise in user lifetime value, a testament to our continued investment in compelling content and innovative, differentiated products delivered across diverse formats,\u201d TME CEO Ross Liang<\/strong> said in a note to investors.<\/p>\n \u201cThis momentum has driven further growth in both our paying user base and ARPPU, with particularly strong adoption by our SVIP memberships. As we look ahead, we remain committed to enhancing our core competitiveness and pioneering new ways to inspire deeper and broader music engagement.”<\/p>\n TME\u2019s earnings report noted that the company recently renewed its licensing agreement<\/a> with Sony Music Entertainment<\/b>, which included giving SVIP subscribers access to Sony\u2019s 360 Reality Audio feature. That follows last year\u2019s renewal<\/span><\/a> of TME\u2019s agreement with Universal Music Group<\/b>.<\/p>\n TME also highlighted agreements it has inked with music companies across East Asia.<\/p>\n \u201cWhile Chinese genres remain the cornerstone of music streaming, we are seeing increasing popularity for Korean, English, and Japanese tracks,\u201d TME said.<\/p>\n \u201cTo cater to this rising interest, we recently deepened collaborations with South Korea’s Starship Entertainment<\/strong> and YG Entertainment<\/strong>, alongside Japan’s leading ACG<\/strong> entertainment company, further strengthening our international music offerings and enhancing cultural diversity across our platform.\u201d<\/p>\n
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