Why Is Chinese Media Giant Tencent Spending Billions Investing in Major Music Companies? – Variety

It is tempting to envision Chinese media firms as the local equivalent of a familiar Western brand. That mindset imagines Weibo as the Chinese Twitter, iQIYI as the Chinese Netflix, and WeChat as a Middle Kingdom version of WhatsApp.

The reality is usually more complicated. Largely walled off from international competition, many Chinese media-tech firms have grown by being hybrids, with games firms spilling over into live-streaming, and e-commerce firms justifying excursions into streaming video.

Tencent-owned WeChat’s success as a “Super App,” delivering everything from messaging to photo sharing, via corporate communications and cashless payments, has become a role model for many Asian unicorns – and probably the envy of Facebook too.

To think of its NYSE-listed subsidiary Tencent Music Entertainment (TME) as simply the Chinese counterpart of international music streaming leader Spotify is to understand only part of the company.

That perspective may also underestimate Tencent’s long term ambition for TME. And it makes Tencent and TME’s recent purchases of equity stakes in Western music majors Universal Music and Warner Music — not to mention its arrangement with Spotify that finds the two companies owning nearly 10% of each other — look inconsistent with TME’s business focus, which for the moment is largely China-centric, and involves non-controlling interests.

As part of more than $6 billion it has spent on music investments in recent years, Tencent and TME paid $3.3 billion for a 10% stake in Universal Music in January. And this
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