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Tencent Music Launches US IPO

Tencent Music Launches US IPO

On December 12, Tencent Music Entertainment Group (TME) officially launched its US IPO on the New York Stock Exchange. The music-streaming company’s initial public offering was priced at $13 per share for a total offering size of $1.066 billion. In the prospectus, the company was valued at $21.3 billion. TME has a very different business model compared with the unprofitable Spotify, which gains its revenues from paying subscribers (90%) and advertising (10%). TME, however, generates revenues from its music streaming services and, more importantly, social entertainment services. In the first three quarters of 2018, social entertainment services contributed 70.4% of the company’s profits, while music streaming service provided 29.6%. Much of its revenues come from live-streamed performances and online karaoke. With these two types of social entertainment services, TME is currently having over 800 million monthly active users with each user spending 70 minutes using its services per day.  Moving forward, TME plans to increase net profits by generating more revenues from online music services, developing original music to reduce spending on licensing, and organizing offline events. Read more on Entertainment Capital

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