音樂產(chǎn)業(yè)：中國的崛起

1、12February2019ChinaEQUITIESChina pan-entertainment market size(Rmb bn)China Internet and MediaMusic: rising power in China2502001501000332 4 7 151057956138178215140%Key pointsKey points Improving IP protection and social networking has sparked rapid growth in online music sales. Music is under-monet

2、ized in China, compared to games and video. Music pan-entertainment market forecast to grow from Rmb33bn in 2017 to Rmb215bn in 2023. We initiate on Tencent Music Entertainment with Outperform.100%80%60%40%20%0%Online music pan-entertainment market yoy%Source: iResearch, Macquarie Research, February

3、 2019Paying ratio among pan-entertainment verticalsIP and content is king in Chinas internet and entertainment spaceAs we enter into the Year of Pig, we conduct an in-depth analysis of Chinas entertainment and media sector, with initial focus on the music industry.Compared to other content, music is

4、 highly recyclable and has lower hit-or-miss risk than video, games and movies. We believe Chinas internet space is also entering into a new era where content, rather than distribution channel, is king.25%20%15%10%4%5%15%9%20%We initiate coverage of Tencent Music Entertainment, the No. 1 entertainme

5、nt stock in China, with an Outperform rating and a target price of US$19.5.Improving IP protection fostered good paying behaviour in ChinaChinas music market has been under-developed and fragmented due to deficiencies in copyright protection until 2016, when the government started to terminate unaut

6、horized music online. In 2017, Chinas music market ranked No. 10 globally, with revenue of only US$0.3bn, compared to US$5.9bn for the US. In contrast, China has overtaken the US to be the largest online game market in the world in 2017, with US$33bn revenue.Source: Company data, iResearch, Macquari

7、e Research estimates, February 2019Inside HYPERLINK l _bookmark0 Music: rising powerinChina2 HYPERLINK l _bookmark1 Gauging the size of Chinas music pan- HYPERLINK l _bookmark1 entertainmentmarket HYPERLINK l _bookmark2 Market consolidation post copyright regulations HYPERLINK l _bookmark2 andconten

8、twarTencent Music Entertainment(TMEUS)14Analysts (update)Macquarie Capital Limited HYPERLINK /directory/people/details?analystId=4444 Wendy Huang, CFA +852 3922 3378 HYPERLINK mailto:wendy.huang wendy.huang HYPERLINK /directory/people/details?analystId=5374 Ellie Jiang +852 3922 4110 HYPERLINK mailt

9、o:ellie.jiang ellie.jiang HYPERLINK /directory/people/details?analystId=5211 Frank Chen +852 3922 1433 HYPERLINK mailto:frank.chen frank.chen HYPERLINK /directory/people/details?analystId=5409 John Wang +852 3922 3578 HYPERLINK mailto:john.wang john.wangHigher user penetration, yet lower paying rati

10、oCompared to other entertainment media in China, music has higher internet user penetration (71%) than mobile games (64%), short video (46%) and online literature (17%). User penetration of music is second only to that of video (94%). Although both music and video have gained significant users in th

11、e past one year, monetisation of the music industry in China is still in its infancy, as is evident from the paying conversion gap vs video and gaming industry. With diversified and innovative revenue models, investment in quality and curated music content, we believe music will be able to tap the d

12、eeper pockets of younger consumers and see paying conversion rise from 4% in 2018 to 10% in 2022. iResearchs blue-sky forecast is more aggressive, projecting 22% by2022.A dynamic music pan-entertainment market with two major playersChinas online music pan-entertainment market consists mainly of subs

13、cription/digital music purchases, online karaoke, music-centric live streaming, online advertising, and online music copyright operations. Chinas music market is highly dynamic, which enables Chinese consumers to engage with music in many ways, including discovering music, listening, watching, singi

14、ng and socializing. According to iResearch, this broad definition pan- entertainment market for music in China will register 37% CAGR from Rmb33bn in 2017 to Rmb215bn in 2023. Tencent dominates this high-growth market with the top four music apps in China, followed by NetEase Music.Please refer to p

15、age HYPERLINK l _bookmark9 41 for important disclosures and analyst certification, or on our website HYPERLINK /research/disclosures /research/disclosures.Music: rising power in ChinaChina ranks No. 10 in the fast evolving global music marketThe global music markets revenue bottomed in 2014 at US$14

16、.1bn, as digital music revenue started to make up for losses in physical sales (mainly CDs). According to IFPI, digital sales, including streaming, accounted for 54% of global music revenue in 2017. Streaming music revenue alone increased 41% to $6.6bn in 2017, with 176m paying users (adding 64m fro

17、m last year) and accounted for 38% of global music revenue.The global recorded music market has been dominated by the three largest music groups: Universal Music Group (UMG), Warner Music Group (WMG), and Sony Music Entertainment (SME), whose collective market share in revenue was 74% in 2017 based

18、on our estimate. UMG had a 30% share of combined physical and digital recorded-music revenue. Its digital recorded- music sales were also the highest among all peers, taking approximately 32% of total revenue made in global recorded-music industry in 2017.Fig 1 Global recorded music industry revenue

19、s 1999-2017 (US$ bn)1.02.76.611.94.03.825.020.015.010.05.00.01999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017PhysicalDigital(excl.streaming)StreamingPerformanceRightsSynchronisationrevenuesSource: IFPI, Macquarie Research,

20、February 2019Fig 2 Global recorded music revenue bysegment(2017)Fig 3 Recorded music companies revenue share(2017)26%UMG 30%26%UMG 30%WMG 21%SME23%Performance Rights 14%Streaming38%Physical30%Digital (excl. streaming) 16%*Streaming primarily refers to paid subscription audio streams. Synchronisation

21、 refers to revenue from the use of music in advertising, film, game s and television programmes.Source: IFPI, Macquarie Research,July2018Source: Sony, WMG, Billboard, IFPI, Macquarie Research, February2019China music market revenue increased 35% to $292mn in 2017 per IFPI, ranking 10th among the top

22、 music markets globally, up from 12th in 2016.Fig 4 Top 10 music markets revenues 2017 (US$ bn)6.05.0USAJapan GermanyUKFranceCanada AustraliaBrazilChinaSource: Company data, Macquarie Research, December 2018Music is under-monetised in ChinaOnline music is one of the most active verticals in Chinese

23、pan-entertainment industry. Per Questmobile, 7 out of 10 internet users in China use online music services, a penetration rate second only to that of online videos. Active user penetration for the online music vertical expanded 9ppts to 71% in July 2018, surpassing mobile games. However, the music i

24、ndustry has been under-monetised in China, with the lowest paying ratio4%among all pan-entertainment verticals. In comparison, online games have the highest paying ratio20%per our estimate, while live streamings paying ratio averages 9%, despite the lowest active user penetration.Fig 5 Pan-entertain

25、ment industries active user penetration71%62%64% 16% 17%6% 8%6% 6%Online video Online music Mobile game ShortvideoliteratureMobileEntertainmentlivestreamingJul-17Jul-18Source: Questmobile, Macquarie Research, February 2019Fig 6 Paying ratio comparisons among pan-entertainment verticals20%15%20%15%9%

26、4%5%20%15%10%5%0%OnlinemusicOnlineliteratureLivestreamOnlinevideosOnlinegames*Online music data as of 2017, Online literature and livestream are as of 3Q18. Online videos and mobile games data are on our estimates.Source: Company data, iResearch, Macquarie Research, February 2019Compared to rapid gr

27、owth in the game industry, Chinas music market is still at an early stage of development. In 2016, Chinas total revenue in game industry reached $27.1bn, for the first time exceeding the USs $24.9bn. On the other side, Chinas music market generated only $0.3bn revenue in 2017, compared to US$5.9bn r

28、evenue from the US music industry. According to iResearch, the recorded music market in the US was 45 times that of China in 2017 on a per- capita basis. The gap, however, should narrow with Chinas per capita spending on recorded music likely more than quadrupling over 2017-2023, per iResearch.Fig 7

29、 China vs US musicindustryrevenueFig 8 China vs US game industryrevenue7.06.05.04.0($bn) 3532.427.132.427.127.624.921.321.822.618.1255.00.32.01.0-2014201520162017ChinamusicUS music10502014201520162017ChinagameUSgameSource: IFPI, Macquarie Research,October2018Source: Newzoo, Macquarie Research, Octob

30、er2018Higher willingness to pay for music, especially among younger consumersThanks to stricter copyright protection, growing penetration of online music services and increasing willingness to pay, we expect to see Chinas online music industry on the rise, with expansion in the paying user base and

31、enhanced monetarization capability. According to Questmobile, approximately 60% of Chinese consumers are willing to make purchases for online music, and membership on music platforms is the top spending items among payingusers.60% of users in China are willing to pay for online music, per Questmobil

32、e. In particular, users below 35 years showed higher interest to pay. Among paying users, 77% of have purchased membership and +48% have paid for digital albums or songs. 30% of users have chosen to tip the live broadcasters with average ARPU of Rmb32.8 each time.Fig 9 Chinese consumers willingness

33、to pay formusicFig 10 Consumption type and ARPU for online musicusers100.0%90.0%80.0%70.0%60.0%50.0%40.0%30.0%20.0%10.0%59.8%61.4%65.5%67.5%51.3%59.8%61.4%65.5%67.5%51.3%38.2%24.8%29.1%32.0%35.9%38.2%24.8%29.1%32.0% 8.2%2.7%5.3%7.7%35.5%44.7%19.8%OverallUnder24yearsold25-30years 31-35years 36-40year

34、s Over 41 years oldUnwillingNotsureWillingSource: Questmobile, Macquarie Research, December 2018ARPU for membership purchase is on a monthly basis. ARPU forthe rest is based on eachpurchase.Source: Questmobile, Macquarie Research, December 2018Fig 11 Age demographics of online music users(July2018)F

35、ig 12 User demographics of online music user (July2018)Ages 36 to 9%Ages 41 to above7%Tier-1 cities 14%Ages 31 to 15%Under 24 years old 38%Tier-4 and below cities 36%Tier-2 cities 30%Ages 25 to 3031%Tier-3 cities 20%Source: Questmobile, Macquarie Research,December2018Source: Questmobile, Macquarie R

36、esearch, December2018Gauging the size of Chinas music pan-entertainment marketDriven by growing active users and high user engagement, the Chinas online music pan- entertainment market generated approximately Rmb33bn revenue in 2017, and is expected to grow to Rmb215bn in 2023 with a 6-year CAGR of

37、37% on iResearchs estimates.Fig 13 Music industry value chainSource: iResearch, Macquarie Research, December 2018Fig 14 Chinas music pan-entertainment market size215.2178138105.2215.2178138105.279.356.1315.120015010050020132014201520162017 2018E 2019E 2020E 2021E 2022E 2023EOnline musicpan-entertain

38、mentmarketyoy%140.00%120.00%100.00%80.00%60.00%40.00%20.00%0.00%Source: Company data, Macquarie Research, February 2019Chinas online music pan-entertainment market primarily consists of 1) online music service (subscription and digital music purchase), 2) online Karaoke and music-centric live stream

39、ing, 3) online advertising and online music copyright operations. We will discuss each segment in following section.Fig 15 Chinas music pan-entertainment breakdown (2018)Online music copyright market7%15%Online music services 11%Online karaoke and music-centric live streaming67%*Online music service

40、s consist of subscription and digital music purchases. Others include primarily online advertising.Source: iResearch, Macquarie Research, February 2019Online music services (subscription and digital musicpurchase)Revenue for online music services is generated primarily through membership subscriptio

41、ns and digital music purchases. In 2017, Chinas online music services market generated Rmb4.4bn revenue. iResearch forecasts the market will further expand to Rmb36.7bn by 2023, representing a 6-year CAGR of 43%, driven by increased spending in music.Thanks to improved copyright protection, the onli

42、ne music paying ratio in China increased from only 0.4% in 2013 to 3.9% in 2017. Currently, a large portion of online music streaming services revenue is generated by downloads, with users paying subscription fees to download certain songs over a period. As the market matures, online music platforms

43、 will shift towards a paid-streaming fee model, which provides significant growth potential for the industry. According to iResearch, the paying ratio in Chinas online music services market will reach 28.7% by2023.Fig 16 Online music servicesmarketsizeFig 17 Paying ratio comparison inChina(Rmb 40353

44、02520151050.9 1.9 3.34.4 6.38.1140.00%120.00%100.00%80.00%60.00%40.00%20.00%45.0%40.0%35.0%30.0%25.0%20.0%15.0%10.0%6.9%13.2%22.5%28.0%33.5%37.4%39.6%40.0%28.7%21.8%13.1%0.400.00%5.0%1.5%2.7%3.0% 3.9% 5.3%6.3% 8.0%0.0%0.4% 0.8% 1.7%Onlinemusicservicesyoy%2013 2014 2015 2016 2017 2018E 2019E 2020E 20

45、21E 2022E 2023EOnlinemusicservicesOnline videoSource: iResearch, Macquarie Research,October2018Source: iResearch, Macquarie Research, October2018Online karaoke and music-centric live streamingservicesChina has a dynamic environment for music-related consumption, including online music streaming, pod

46、cast, online karaoke and music live streaming. While a majority of music consumers make purchases on online music apps such as Kugou and QQ Music, approximately 47% and 28% of consumers also purchase through online karaoke and music live streaming verticals. Per Questmobile, as of July 2018, the num

47、ber of active users reached 67m for entertainment live streaming and 189m for online karaoke. Active user penetration rate for online karaoke reached 17% as of July 2018 (Fig19).Karaoke singing has always been a popular social activity in China, which has helped to accumulate a highly engaged user b

48、ase in online karaoke services. Online karaoke platforms allow users to sing and perform, while socializing in online communities with friends and others with similar interests. Currently, WeSing is the largest online karaoke services provider in China in terms of MAU. Thanks to Tencents social netw

49、ork, WeSings MAU registered 30% CAGR over 2016-2018, compared with the relatively flat MAU for the second-largest player Changba over the same period (Fig21).Live streaming has also shown strong growth in China. Driven by high user engagement and a large base of musicians, the segment has demonstrat

50、ed strong monetarization potential through salesofvirtualgiftsandpremiummemberships.AccordingtoiResearch,theoverallsizeofChinas online karaoke and music-centric live streaming services reached approximately Rmb22bn in terms of revenue in 2017, and is expected to grow to Rmb130.5bn in 2023, represent

51、ing a six-year CAGR of34.6%.Fig 18 Where music is consumedinChinaFig 19 User base of different musicplatforms100%90%80%70%60%50%40%30%20%10%80604020-Entertainment live streamingPodcastOnline 18%16%14%12%10%8%6%4%2%0%93%54%93%54%47%28%21%PodcastOnline KaraokeMusic live streamingOffline mini- KTVUser(

52、m)UserPenetrationSource: Questmobile, Macquarie Research,October2018Source: Questmobile, Macquarie Research, December2018Fig 20 MAU comparison for WeSing (TME) and ChangbaFig 21 Total revenue of Chinas online karaoke and music- centric live streaming market(m) 80604020-201620172018WeSingChangba(Rmb

53、160.0140.0120.0100.080.060.040.020.0-1.0 1.9 3.38.922.053.790.4110.7150.52013 2014 2015 2016 2017 2018E2019E2020E2021E2022E2023ESource: Questmobile, Macquarie Research,February2019Source: iResearch, Macquarie Research, October2018Compared to the general live streaming industry, users on music-centri

54、c live streaming platforms are stickier in terms of watch frequency and total time spent. According to iResearch, more than 81% of the users watch music live streaming at least once per day, compared to only 54% for general live streaming. Meanwhile, over 45% users watch music live streaming for mor

55、e than three hours per day, versus only 13% general users watch the same amount.A majority of music-centric live streaming users are from lower-tier cities who typically spend more time in leisure and entertainment. More than 60% of the users consider purchasing a digital album from live streaming p

56、erformers they like, and over 30% of the users are willing to pay more than Rmb15 per album, per iResearch.Fig 22 Live streaming userfrequencycomparisonFig 23 Viewing timecomparison 50.00%40.00%30.00%20.00%10.00%0.00%50.00%45.00%40.00%35.00%30.00%25.00%20.00%15.00%10.00%5.00%0.00%3hrs2-3hrs1-2hrs0.5

57、-1hrs0.5hrsMusiclivestreamingGenerallivestreamingMusiclivestreamingGeneral livestreamingSource: iResearch, Macquarie Research,December2018Source: iResearch, Macquarie Research, December2018Fig 24 Most music-centric live streaming users are in lower- tier citiesFig 25 Majority of users will consider

58、purchasing digital albums released by live streaming performersWill not 18%Will purchase 31%Somewhat unwilling to purchase 17% Will not 18%Will purchase 31%Somewhat unwilling to purchase 17% willing to purchase 34%Tier215.70%NewTier 111.70%Tier18.50%Source: iResearch, Macquarie Research,December2018

59、Source: iResearch, Macquarie Research, December2018Online Music CopyrightOperationsThe content creation and copyright ownership landscape is more fragmented in China compared to those in developed countries. According to iResearch, in terms of the volume of tracks streamed, the top five labels in Ch

60、ina had a combined market share of less than 30% in 2017, whereas the top five labels globally had a combined market share of nearly 85%.In China, online music copyright operation is another growth driver for Chinas online music industry going forward. The segment involves original copyright licensi