Wen | Zhang Shule (Columnist of People's Daily And People's Post and Telegraph, Observer of Internet and Game Industry)
Tencent Music has entered a "weak" era.
On March 22, the online music giant Tencent Music Entertainment Group released its fourth quarter and full-year financial reports for 2021.
The annual revenue was 31.24 billion yuan, an increase of 7.2% year-on-year, and the growth rate was lower than the 14.6% in 2020. At the same time, net profit declined to RMB3.03 billion, compared to RMB4.16 billion for the same period in 2020. Non-IFRS net profit was RMB4.15 billion, compared to RMB4.95 billion for the same period in 2020.
In the fourth quarter of 2021, Tencent Music fell into negative growth. Revenue was 7.61 billion yuan, down 8.7% year-on-year, and net profit was 536 million yuan, down 55.3% year-on-year.
Fortunately, the financial report of its own big man Tencent is not very good, which makes Tencent Music less noticed.
But users are already voting with their wallets.
In July 2021, the State Administration for Market Regulation imposed antitrust penalties on Tencent Music, including ordering Tencent Music to release exclusive music copyrights and stop high prepayments for payment of copyright fees.
Online music services, which are most directly affected by copyright, experienced a decline in growth in the fourth quarter, with a growth rate of only 4.3%, far below 29.0% in the same period last year, and also lower than 24.3% in the third quarter, the lowest level in nearly three years.
User churn is one of the direct causes. Although the number of paid users has increased by 5 million, Tencent Music's overall users are in a state of loss, and the mobile monthly active users of online music services have decreased by 7 million year-on-year.
After losing exclusive copyrights, many users lost the biggest reason to buy Tencent Music members. At the same time, netease cloud music online music monthly paid users increased by more than 10 million, from 16 million to 28.9 million.
Has Tencent Music, which has been crushing NetEase Cloud Music, stall in the market and lose its voice in front of consumers?
In this regard, the investor network Huang Yunxin and The Zinc Finance Wu Chenguang respectively exchanged with Shule, and the poor Road thought:
The problem that can be solved with money is still a problem. Tencent Music's magic weapon to maintain control over the field for many years has failed.
Declining profits, declining revenue from social entertainment business, declining monthly activity, etc., Tencent Music boils down to multiple factors, such as competition, policy supervision, and short video impact.
But the core is not actually the chain reaction caused by the "exclusive copyright" in the regulation, but mainly the internal factors, namely:
There are very few revenue scenarios for online music, and most of them can only rely on membership payment, while the cost of music copyright is rising and the total amount of music that needs to be purchased is huge, which further reduces profitability.
In this regard, Tencent's response is "secondary listing".
Tencent Music disclosed the news of the second listing of Hong Kong in this financial report.
In the earnings report, in order to provide shareholders with greater liquidity and more protection in the changing regulatory environment, Tencent Music plans to re-list on the main board of the Hong Kong Stock Exchange in the form of an introduction if it obtains regulatory approval.
Where does the confidence of the secondary listing come from?
It is foolish to think that the secondary listing is still to allow Tencent Music, which is "not bad money", to obtain more external financial resources, and to prepare more sufficient ammunition for it to be able to deeply explore the profit scenarios of online music, especially the new gameplay combined with offline physical scenes.
But how does Tencent Music get the capital market to have confidence in its story at this moment?
It was still a moat, although after the exclusive copyright was lost, the moat was filled in half.
But in essence, the deep water area of Tencent Music's moat is not a copyright purchased with heavy money, but a user habit under the social chain.
However, after the cancellation of exclusive music, if there is no exclusive original blockbuster new song that continues to emerge, this moat with its own weak protection ability will inevitably be gradually filled.
There is not much time left for Tencent Music, so the second listing is imminent.
But the arsenic cream of the other side is only to attack the poison with poison, and in the long run, it is the honey of the entire industry.
After the exclusive copyright is lifted, it allows the online music platform to get rid of the pattern of competing for exclusive copyright bidding, which is conducive to copyright price reduction and in the long run, it is also in line with the needs of the platform, but at this stage Tencent is more passive.
In the end, to change this state, the key is to de-player, work hard to support original music and manufacture Divine Comedy, and explore more offline profit scenarios.
Tencent itself is also in action, Tencent Music said to the outside world: "We are striving to improve our competitiveness through product innovation and the establishment of more vertical products in the field of social entertainment, including audio live broadcasting, business overseas and virtual interactive content and more social entertainment verticals." ”
However, Tencent Music itself does not occupy a heavy weight in Tencent's great empire, which does not affect the overall situation of Tencent.
Tencent's biggest moat is the social experience of the game substituted for social traffic, and the huge spectrum of blockbuster games makes its overall revenue capacity bottomless.
Music has never been a business that Tencent relies on to make a living, but an experience component of the pan-entertainment empire.
Tencent's overall strategy for music platforms may still be to "let the bullets fly for a while".