Tencent Music Overcomes Setbacks in Q3 Despite China's Anti-Gambling Measures

Tencent Music, a prominent developer of music streaming services in China, has defied expectations in its Q3 results despite challenges posed by the nation's strict anti-gambling policies. The company exceeded its projected revenue, reaching 6.57 billion yuan ($901 million), mainly due to a notable surge in paid subscriptions.

However, this positive outcome doesn't negate the overall decline of 10% year-on-year, attributed to the significant drop in social entertainment performance. The decline was a direct consequence of China's stringent regulations on gambling and similar gamified products.

Tencent Music, a subsidiary of Tencent, took steps to comply with the new regulations, removing gamified features from its platform. This move resulted in a 48.8% drop in revenue for its social entertainment services. Despite this setback, Cussion Pang, Tencent Music’s executive chair, is optimistic about the future.

Looking ahead, Tencent Music aims to stabilize its business in 2024, focusing on alternative ways to serve its loyal customers. Pang views the anti-gambling measures as a temporary setback and expects the social entertainment segment to continue generating a healthy cash flow.

In light of China's intensified crackdown on gambling, DouYu, a live-streaming platform also backed by Tencent Holdings, faces challenges. Chen Shaojie, the platform's chairman, is reportedly under investigation for content related to gambling and pornography. Shaojie's absence without official leave has sparked speculation about a potential arrest, though it remains unconfirmed.