The online music industry is accelerating its transition from a focus on user traffic scale competition to a new phase of comprehensive competition centered on ecosystem value, technological experience, and diversified monetization. Against this backdrop, the financial reports of Tencent Music Entertainment Group (TME-SW) have become a focal point for capital markets. The underlying logic is that through forward-looking strategic planning, TME-SW has constructed a diversified and integrated music service system. This has not only built a unique competitive advantage but also positions the company to lead the industry's ongoing evolution. This leading posture suggests that TME-SW will profoundly influence the distribution dynamics of the industry's value chain, making it a crucial perspective for market observers and investors to assess the sector's future and the intrinsic value of TME-SW.
On March 17, TME-SW once again validated the effectiveness of its strategy and the resilient development of its business under its unique advantages with a set of robust financial results. According to the report, TME-SW's total revenue for 2025 reached 32.9 billion yuan, a year-on-year increase of 15.8%, setting a new historical record. Adjusted net profit grew by 22% year-on-year to 9.92 billion yuan, marking the third consecutive year of sustained growth since 2023. Specifically for the fourth quarter, total revenue was 8.64 billion yuan, up 15.9% year-on-year, while non-IFRS net profit for the period was 2.58 billion yuan. This dual growth in total revenue and adjusted net profit underscores the certainty of TME-SW's steady development.
The strong performance of the online music business formed a solid foundation for this robust growth. Within this segment, the online music subscription service continued its steady expansion. The number of online music paying users reached 127.4 million during the period, and the average revenue per paying user (ARPPU) increased year-on-year to 11.9 yuan, driving a 13.2% year-on-year increase in online music subscription revenue to 4.56 billion yuan. Furthermore, growth in non-subscription online music revenue, including income from live concerts and artist merchandise, exceeded market expectations. The financial report disclosed for the first time that fourth-quarter online music non-subscription revenue surged 40.8% year-on-year to 2.54 billion yuan, further highlighting the significant results of its diversification strategy. This business, alongside the long-term, steadily growing subscription service, jointly supports the high-quality growth of online music service revenue.
The core driver of TME-SW's steady growth stems from the continuous advancement of its "One Body, Two Wings" strategy, which integrates content and platform. During the reporting period, the company deepened this strategy, further building a differentiated, one-stop music service platform and continuously enhancing its core competitive advantages.
On the content side, TME-SW persistently provides diverse and differentiated content to meet the needs of users across different circles, ages, and preferences. This approach attracts new users, enhances user stickiness and activity, while consolidating advantages in classic content and high-quality original productions. For instance, the Mid-Autumn Festival themed song "Year After Year," jointly produced by TME's Producer Studio and Xiao Zhan's studio, gained rapid popularity after its release, charting in 17 countries and regions globally, with single-day social media platform reads exceeding 100 million. Multiple songs co-produced by TME were featured on the 2026 China Central Television Spring Festival Gala and quickly became hits, with several works surpassing 10 million plays within a week.
Simultaneously, TME-SW creates high-quality live experiences to further release IP value. By deeply satisfying core users' demand for high emotional-value-added experiences, the company continuously expands its service boundaries, laying a solid foundation for exploring broader market opportunities. During the period, TME-SW successfully hosted multiple flagship offline events. Notably, it organized G-Dragon's 2025 large-scale tour, which included 20 performances across 8 cities in the Asia-Pacific region, cumulatively attracting over 260,000 attendees. Two concerts held at the Taipei Dome in the fourth quarter alone drew more than 75,000 spectators, marking the largest-scale event TME-SW has organized to date.
On the platform side, TME-SW caters to the broad needs of diverse user groups through its multi-product, multi-scenario layout. Benefiting from deep collaborations with labels and artists, as well as the introduction of new high-value privileges, the number of its Super VIP members surpassed 20 million by the end of 2025, setting a new milestone. Furthermore, TME-SW leverages AI to empower music creation, enhance user experience, and comprehensively drive music consumption. Its recently launched one-stop AI music production platform has already empowered over 150,000 musicians and more than 10 million general users to create music more efficiently.
Through the deep synergy between "Content Ecosystem" and "Platform Services," TME-SW has built a self-reinforcing growth flywheel. This flywheel is driven by a core focus on "deepening user value." By consistently providing irreplaceable, high-quality content and unique experiences, it continuously increases users' willingness to pay and loyalty, thereby propelling the business towards a healthier, more sustainable growth trajectory. Under this mechanism, the growth flywheel evolves into a core competency that is difficult to imitate: premium content attracts users, while superior platform experiences and exclusive privileges further strengthen user stickiness and sense of belonging, promoting the retention and conversion of more high-value users. The resulting financial returns, in turn, are reinvested into even better, more differentiated content and service systems, creating a self-accelerating virtuous cycle of "Content — Experience — Value."
Consequently, TME-SW's value focus has gradually shifted from basic dimensions like music library size towards comprehensive services covering full-scenario experiences and emotional connections. This has enabled the company to build an ecosystem-level advantage characterized by distinct differentiation, rooted in industry depth and breadth. The latest manifestation of this ecosystem advantage is TME-SW's ability to continuously expand its diversified service boundaries while its subscription business grows steadily, which is a key reason for its non-subscription revenue exceeding expectations.
During the reporting period, TME-SW innovatively launched a series of collectible merchandise around physical releases, effectively boosting user activity and sales conversion. For example, Yu Shuxin's collector's edition physical album "Spicy Honey" generated significant collector interest. Derivative products such as Zhang Yixing's special commemorative box set for the "Voyage: Boundless" tour and Luhan's "Through the Seasons to See You - 2025 Asia Tour Commemorative Book" further extended the long-tail value of performance IPs, strengthening fan participation and emotional bonds. These cases demonstrate TME-SW's success in translating its vast online user base and content ecosystem into the release of consumer experience value through offline concert ticket sales and merchandise sales. This indicates that TME-SW does not rely solely on the membership subscription model but has built a full-scenario commercial closed loop, offering the most direct evidence of its ecosystem-level competitive advantage.
From a long-term perspective, TME-SW possesses a clear and sustainable growth path, with its high-quality development expected to continue. On one hand, the online music subscription business serves as its fundamental growth driver. As Generation Z becomes the main consumer force, content quality continues to improve, and platform commercialization strategies are refined, UBS estimates that the paid conversion rate in China's music market could approach international advanced levels within the next 5-7 years. The new milestone in TME-SW's Super VIP user count indicates users' willingness to pay for high-quality, diversified services, which is expected to further drive continuous ARPPU growth.
On the other hand, the online music non-subscription business is emerging as a new growth engine for TME-SW. Rapidly growing segments like live concerts and artist merchandise are gradually establishing another pillar for its performance growth, further expanding its commercial boundaries.
Given the high certainty of TME-SW's long-term, steady growth, multiple brokerage firms and investment banks have issued reports expressing optimism about its future prospects. Daiwa, for instance, expressed confidence in TME-SW's focus on deepening user value and its new revenue streams from offline music events and merchandise, upgrading its rating from "Outperform" to "Buy." Goldman Sachs also maintained a "Buy" rating, affirming its positive view on TME-SW's growth strategy of expanding Average Revenue Per User (ARPU) through diversified services and increasing membership penetration.
As TME-SW has consistently demonstrated to the market through its steady performance growth that the differentiated, ecosystem-level competitive advantage built upon its diversified, integrated music service system possesses long-term potential for sustainable growth, it is positioned to be among the first to undergo a revaluation when market sentiment recovers and value discovery once again dominates investment logic. The current juncture presents a configuration window worthy of close attention from investors.