Part 2/5:
Tencent Music operates as a holding company for four major music services in China, showcasing its dominance in the Chinese music industry. The rapid growth of its user base offers exciting prospects for the company’s IPO. More intriguing than user volume is how Tencent Music generates revenue.
Unlike Spotify, which primarily relies on subscriptions and advertisements, Tencent Music’s revenue is significantly boosted through virtual gifts exchanged during live streaming events and features like online karaoke. The shift towards live streaming is a major trend in China and has proven to be a lucrative market for Tencent Music. Furthermore, the company enjoys a healthier gross margin compared to its Western counterparts, suggesting a stronger profitability outlook.