China’s Tencent Music Entertainment reported better-than-expected third-quarter revenue last week, as the streaming company added more paying users.
But, it recorded the slowest rise in a widely watched metric for its biggest business, social entertainment services, which executives attributed to growing competition.
Tencent Music’s U.S.-listed shares rose as much as 2% before trading down about 1% in volatile extended trade.
The company’s monthly average revenue per paying user from its social entertainment services unit rose 7.4% to 127.3 yuan ($18.20), the lowest growth since it went public in December.
“We recognize that it may be slightly below where we previously thought it would be,” Tony Yip, chief strategy officer, said on a conference call. “That’s primarily because of increasing competition that we are facing with the short video platforms.”
Tencent Music competes with Alibaba-backed NetEase Cloud Music in streaming services, and with short video sites such as Bytedance’s Douyin and Tencent-backed Kuaishou in social entertainment.
Although its music streaming unit has more users, the company’s biggest revenue drivers are social entertainment services, including karaoke platforms, where users can live stream concerts and shows.
The social entertainment business reported 12.2 million paying users during the quarter, up 23.2% from a year earlier.
Yip said the firm will step up investment aimed at user growth, with a view to reaching a younger demographic with content more appealing to them as well as initiatives such as offline singing competitions and partnerships with game studios.
The company also said it is exploring opportunities to take services outside China and hopes to introduce monetization methods such as virtual gifts to Thailand, Indonesia, and Malaysia.