TME(US:TME) 3 6 Ke·2025-05-22 03:35Core Viewpoint - The audio industry is undergoing a phase of consolidation driven by the importance of scale in the content sector, with free business models demonstrating a strong ability to attract users and traffic, potentially breaking market size limits [1][4][25] Group 1: Company Developments - Tencent Music Entertainment (TME) plans to acquire Ximalaya for $2.4 billion, with the agreement potentially reached in the coming weeks [1] - TME's online music service revenue increased by 25.5% year-on-year, accounting for over 75% of total revenue, highlighting its growth strategy focused on online music [5][6] - TME's monthly active users for online music services have shown a decline from 620 million in 2022 to 570 million in 2024, indicating challenges in user retention [7] Group 2: Market Dynamics - The audio market has seen a lack of platform-level companies, with many players reverting to content production rather than platform development [1][4] - The audio industry faces a growth ceiling due to high content production costs and the uncertainty of monetization, leading to a trend where platforms must scale to survive [4][19] - The overall user base for online audio has stagnated at 335 million, with a notable decline in usage time from 58 minutes in 2020 to 25 minutes [22][24] Group 3: Competitive Landscape - Ximalaya, despite facing challenges in commercialization and high content costs, boasts a significant user base of 303 million monthly active users, capturing 60% of mobile listening time in China [11][18] - The competitive landscape is shifting, with platforms like Douyin and Kuaishou capturing market share from traditional audio live streaming services [8][20] - The trend of free models in content consumption has proven effective in other sectors, suggesting a potential for similar disruption in the audio market [25][26]