China's digital music and content streaming industry has been showing stable growth over the past months and industry analysts believe there is more to be explored for interested businesses and investors.
According to China Daily, a new report by market research firm iResearch revealed that China's digital music market saw revenues hike by 59.8 percent last year, hitting 7.63 billion yuan or $1.08 billion in profits.
By 2023, the figure is expected to further climb to 42.6 billion yuan. Researchers noted that the market shows great potential for companies such as NetEase and Tencent, since many young consumers are drawn to the industry.
research analyst, Zhang Xiao, explained that rapid growth in Chinese digital music segments were powered by two major factors: good implementation of favorable business policies by the government, as well as increasing investments in the sector.
At this time, the purchasing power of younger Chinese consumers has grown significantly, which is why some companies are taking advantage of the uptrend in spending. Furthermore, there is still a lot of space for growth, the report said.
"According to our survey, the younger generation, especially students born in the 2000s, are more likely to pay for content," Zhang pointed out, adding that people who love music and entertainment have "strong willingness" to pay for subscription services.
Among the latest trends in the survey is the power of one consumer to draw other younger Chinese consumers to digital music streams. With many younger buyers influencing their peers to stream and download non-pirated music, the opportunities in the industry can be vast.
In the sector, among the top sources of revenue are copyrighting, advertising, and user payments, with the latter making up for a significant chunk in company profits for streaming providers.
In China's growing digital music sector, Tencent is leading the way. Last month, the Chinese social media and tech giant reported Q3 2019 earnings that beat analyst expectations.
The company reportedly monthly average revenue per paying user increase of 7.4 percent. While the figures are the slowest expansion rate yet since December last year, revenue was still beyond analyst predictions due to more paying users added on the platform.
Chief strategy officer, Tony Yip, acknowledged that the rate is below what Tencent Music initially projected. On the other hand, he said competition played a role in pulling down the growth rate at some point.
Currently, music streaming has yet to drive massive growth for the company. The biggest revenue drivers at this point under Tencent Music is the company's karaoke platforms, social entertainment unit, and live streaming of shows or concerts.
