Tencent Music, a company specializing in music streaming services for the Chinese market, has announced positive Q3 results despite challenges related to the Chinese government’s crackdown on online gambling and gambling-like features. According to Reuters, the company exceeded its initial quarterly estimates due to a significant increase in paid subscriptions. While Wall Street analysts had projected revenue of 6.31 billion yuan for the quarter, Tencent Music actually reported revenue of 6.57 billion yuan ($901 million) for the period ending September 30, representing a 10% year-on-year decline.
The decline in revenue was linked to the company’s social entertainment segment, which suffered due to new regulations on gambling and gambling-like products in China. Although Tencent Music had not engaged in actual gambling activities, it was required to remove gamified features from its live streaming platforms in compliance with the new rules. As a result, the company’s social entertainment revenue dropped by 48.8%, following a previous quarterly decline of 24%.
Despite the challenges posed by the government’s anti-gambling policies, Tencent Music remains optimistic about stabilizing its business. Cussion Pang, the company’s executive chair, stated that their focus for 2024 will be on stabilizing the business and finding alternative ways to serve their loyal customers. Pang expressed confidence in the potential for the social entertainment segment to continue generating a healthy cash flow for the company.
In related news, DouYu, a live-streaming platform backed by Tencent Holdings, is facing issues amid the Chinese government’s crackdown on gambling. Reports suggest that Chen Shaojie, the chairman of DouYu, is under investigation for gambling and pornography-related content on the platform. Speculations about Shaojie’s potential arrest have arisen due to his absence without official leave, but his arrest has not been confirmed.
Overall, Tencent Music’s Q3 results indicate resilience in the face of regulatory challenges, and the company remains determined to navigate the evolving regulatory landscape while maintaining its commitment to customer service.