Tencent Music revenue beats estimates as paid subscribers jump

China's Tencent Music Entertainment Group reported on Tuesday a better-than-expected quarterly revenue as it added more paying users to its music streaming service, at a time when people are largely homebound due to the COVID-19 pandemic.

While its revenue rose to 7.58 billion yuan ($1.15 billion) in the third quarter ended Sept. 30 from 6.51 billion yuan ($910 million) last year, paid subscribers in the company’s online music service jumped 46% to 51.7 million.

The results come at a time when the firm is focusing on its target to put about 20% of its content on the streaming site behind the paywall by the year-end and grow the paid users’ base, all at a time when people have relied heavily on social media and entertainment apps during the pandemic.

The company’s Chief Strategy Officer Tony Yip said the retention rate of paying users continues to improve, and Tencent Music was using bundled discounts and promotions to capture long-term subscribers and “lock them in”.

While most of Tencent Music’s users are in its music streaming unit, the firm’s biggest revenue drivers are social entertainment services, including karaoke platforms, where users can live stream concerts and shows.

Yip said the company had recently upgraded the user interface design and other enhancements in its social entertainment site WeSing to “help users to create more and more higher quality content.”

Tencent Music, in recent months, also signed and renewed licensing deals with international and regional labels like Kobalt Music Group and Merlin Network to add artists such as The Weeknd and Paul McCartney to its library.

Excluding items, the company earned 0.80 yuan per American Depository Share, above estimates of 0.71 yuan per ADS.

Analysts had expected revenue of 7.47 billion yuan, according to IBES data from Refinitiv.