Investment Rating - The report maintains a "Positive" outlook for the media industry as of July 28, 2025 [6] Core Insights - The music industry is expected to transition from a paid growth model to a dual growth model of traffic and payment, driven by the expansion of audio content and refined operations of fan economy [4][10] - The resilience of streaming music against macroeconomic headwinds is highlighted, with a projected CAGR of 22% for China's streaming music industry from 2021 to 2024, significantly outpacing retail sales growth [9][20] - The report emphasizes the importance of expanding content pools to shift the music market from a stock game to a growth game, with Tencent Music and NetEase Cloud Music both enhancing their content offerings [9][10] Summary by Sections 1. Emotional Value Driving High Growth in Online Music Platforms - China's online music platforms are projected to reach revenues of 27.1 billion in 2024, reflecting a 25% year-on-year growth [18][19] - The emotional value derived from music consumption is increasingly recognized, with a shift towards subscription models providing significant psychological benefits to users [20] 2. Traffic: Copyright Expansion Expected to Drive Growth - The overall DAU for the music industry is expected to reach 183.73 million in 2024, with a 2% year-on-year increase [22] - Tencent Music's DAU has been declining, but the acquisition of Himalaya is anticipated to reverse this trend by introducing long audio users [24][41] - ByteDance's platforms have seen significant DAU growth, with a 100% increase in the first half of 2025 [26] 3. Payment: Expansion of Rights Driving Payment Increases - The report notes a significant increase in the proportion of songs available to VIP members, with QQ Music's share rising from 38% to 95% and NetEase Cloud Music's from 4% to 48% [48][49] - The introduction of SVIP memberships is expected to enhance ARPPU, with Tencent Music's acquisition of SM Entertainment and Himalaya providing additional content [50][51] 4. Cost: Operational Leverage and AI Expected to Optimize Margins - The report discusses how the management of top-tier copyrights is improving, leading to increased gross margins for music platforms [9] - AI is expected to decentralize music production, further optimizing margins [9] 5. Investment Recommendations and Targets - The report suggests focusing on Tencent Music and NetEase Cloud Music due to their strategic acquisitions and content expansions, which are expected to drive user growth and payment increases [4][13]

Core Viewpoint - HAYA band aims to showcase the unique charm of Chinese music through the fusion of ethnic and modern music, breaking the boundaries of traditional music and integrating elements from various cultures [1][2][3] Group 1: HAYA Band Overview - HAYA band was established in 2006 and focuses on world music based on ethnic music, featuring members from various ethnic backgrounds, including Mongolian, Sibe, and French [2][3] - The band has expanded its musical reach from Mongolia to international stages, participating in various cultural events and television shows [2][3] Group 2: Musical Fusion and Innovation - The band emphasizes the importance of integrating modern music elements, such as electronic music, while maintaining the core characteristics of Mongolian music [3][4] - HAYA band leader, Quan Sheng, has modified the Morin Khuur (horsehead fiddle) to adapt to modern performance needs, enhancing its sound and expressiveness [3][4] Group 3: Global Reception and Cultural Exchange - HAYA band has received positive responses from international audiences, indicating a strong emotional connection through their music [5][6] - The band aims to transcend ethnic boundaries by incorporating diverse musical elements, promoting a more inclusive understanding of music [5][6] Group 4: Future of Ethnic Music - The rise of AI in music creation is seen as a double-edged sword; while it lowers barriers for music composition, it cannot replicate the unique qualities of ethnic music [5][6] - The future of Chinese ethnic music relies on nurturing talent and encouraging creativity among young musicians, ensuring the preservation and evolution of cultural heritage [6]

Core Insights - Tencent Music reported impressive financial results for Q1 2025, with revenue of 7.36 billion yuan and net profit of 2.23 billion yuan, driven primarily by online music services which accounted for nearly 80% of total revenue [1][2] - Despite financial growth, Tencent Music faces significant challenges with a continuous decline in active users for 14 consecutive quarters, with a current monthly active user count of 555 million [2][3] - The competitive landscape is shifting from copyright battles to ecosystem integration, with rivals like ByteDance's "Soda Music" and NetEase Cloud Music posing increasing threats [1][3] Financial Performance - Tencent Music's Q1 2025 revenue grew by 8.7% year-on-year, while adjusted net profit increased by 22.8% [2] - Online music service revenue reached 5.8 billion yuan, with subscription revenue at 4.22 billion yuan, reflecting year-on-year growth of 15.9% and 16.6% respectively [2] - The number of paying users rose by 8.3% year-on-year to 122.9 million, with average revenue per paying user (ARPPU) increasing from 10.6 yuan to 11.4 yuan [2] User Base Challenges - Tencent Music's monthly active user count has been declining since Q4 2021, with a loss of 1 million users in Q1 2025 [2][3] - The market is witnessing a shift in user payment behavior, with 48.6% of users only occasionally paying for music, indicating that the payment model is not fully matured [3] Competitive Landscape - The social entertainment segment of Tencent Music is under pressure, with revenue declining by 11.9% year-on-year to 1.55 billion yuan [6] - Competitors like Soda Music are rapidly gaining traction, with nearly 100 million monthly active users and a strong presence among the younger demographic [3][6] - Tencent Music's content strategy includes partnerships with major music labels and independent artists, but it faces stiff competition from NetEase Cloud Music, which has also expanded its content library significantly [5][6] Future Growth Opportunities - Tencent Music is reportedly considering acquiring Ximalaya, which could enhance its position in the in-car audio market and diversify its content offerings [7][8] - The company is focusing on the in-car music consumption market, which is becoming increasingly competitive, with rivals like NetEase Cloud Music and Ximalaya also targeting this segment [7][8] - The success of Tencent Music's audio drama "Tomb Raider Notes" indicates potential in the audio content space, showcasing the platform's ability to attract users with diverse content [9]

Core Viewpoint - The global music industry is experiencing intense competition driven by new technologies like AI composition and metaverse concerts, while Tencent Music, a "hidden champion" in China's digital music market, reported impressive financial results for Q1 2025, with revenue of 7.36 billion yuan and net profit of 2.23 billion yuan, with online music revenue approaching 80% of total revenue [1][3] Financial Performance - Tencent Music's Q1 2025 financial report shows a revenue of 7.36 billion yuan, a year-on-year increase of 8.7%, and an adjusted net profit of 2.23 billion yuan, up 22.8% year-on-year [3] - Online music service revenue reached 5.8 billion yuan, with subscription revenue at 4.22 billion yuan, reflecting year-on-year growth of 15.9% and 16.6% respectively [3] - The number of paid users grew by 8.3% year-on-year to 122.9 million, with average revenue per paid user (ARPPU) increasing from 10.6 yuan to 11.4 yuan [3] User Base Challenges - Despite financial growth, Tencent Music faces significant challenges in maintaining its user base, with monthly active users declining for 14 consecutive quarters, currently at 555 million, after a loss of 1 million users in Q1 2025 [3][5] - The rise of competitors like ByteDance's "Soda Music" and NetEase Cloud Music, which leverage community engagement and free listening models, poses a threat to Tencent Music's user retention [1][4] Competitive Landscape - The competition in the digital music market has shifted from copyright battles to ecosystem integration, with a focus on user experience and value delivery [1][7] - Tencent Music has accumulated over 260 million licensed and co-created music tracks and registered 580,000 independent musicians, enhancing its content library [7] - Competitors like NetEase Cloud Music and Soda Music are also expanding their content offerings and user engagement strategies, with significant user growth and content contributions [8] Future Growth Opportunities - Tencent Music is exploring strategic acquisitions, such as a potential purchase of Ximalaya, to strengthen its position in the in-car audio market and diversify its content offerings [11][12] - The in-car music consumption market is becoming increasingly competitive, with both Tencent Music and NetEase Cloud Music vying for market share [10][12] - The company needs to balance between extracting value from existing users and creating new growth opportunities through innovative content and technology integration [12][13]