Tencent Music’s potential independent IPO isn’t industry new anymore. In September this year, Bloomberg has already cited insider information that the Chinese music streaming giant had been looking for a new round of funding before its Public Offering, planning to offer up to 3% of the company’s total shares–valued at $8 to $10 million USD for its investors. Today, Bloomberg has confirmed yet again that Tencent Music will be going public next year, calling it “one of the most anticipated IPOs of 2018.”
There’s no doubt about that–just take a look at how much Tencent has accomplished in recent times: from its merger with China Music Corporation last July to this January’s name change to Tencent Music Entertainment Group (TMEG), the company has successfully created its service infrastructure; from its exclusive digital distribution deal signed last May with Universal to its rollout of Tencent Musician platform, Tencent has established a platform for artists of all levels; from its presence at the Music Matters conference to its strategic investment in Spotify, TMEG has laid a solid foundation for its future upgrade path. Next year might just be its defining year to disrupt the music industry even further.
Moreover, according to Macrolink’s website as well as various media outlets, on September 29th, the holdings company has officially signed off on a deal investing ¥22 million RMB into TMEG. Other companies such as BHG Long Hills Capital, CMBI, and BOCOM International also participated in the investment, one that signals Tencent’s proactive plans to improve its physical infrastructure.
According to Bloomberg, Tencent Music currently has over 17 million songs, enjoying a monthly active user base of 700 million, 120 million of which are paid subscribers, a number that is twice the size of that of Spotify’s. This can aid very well in Tencent’s dominance over Apple Music and Spotify in China. “To both Chinese and foreign musicians, Tencent’s 3 major platforms (QQ Music, Kuwo, and Kugou) is becoming more and more important.” Additionally, with Tencent Group’s vast resources in the entertainment industry assure that its music service will not only include streaming, but also aspects such as artist development and fan economics. “If a singer wants to sell his/her songs and also wants to have a platform to interact with fans, I’m afraid no company other than Tencent Music can do both very well,” said JP Morgan analyst Alex Yao.
Tencent music’s IPO is considered by western media to be the Chinese “sleeping giant”’s important inflection point in its transition to the global streaming market. The company has already signed deals with over 200 record labels internationally, including 20 exclusive rights deals for very low prices. Its $1.21-$1.81 USD monthly subscription fees are also highly competitive compared to the regular $9.99 USD pricing adopted by many of its rivals.
PwC is estimating that China’s digital music sales will increase 88% from 2017 to 2021–a “sprinting” period for the Chinese music industry.
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