Bubble superfan app, concerts, merch are accelerating Tencent Music’s growth… as company expands beyond streaming

Tencent Music Entertainment delivered impressive Q2 2025 results on Tuesday (August 12), with total online music revenues brushing a billion dollars in the quarter (USD $957 million), up 26.4% YoY.

Meanwhile, its higher-priced Super VIP (SVIP) streaming tier surpassed 15 million subscribers – representing around 12% of TME’s total 124.4 million streaming music subscribers.

This represents significant growth from the 10 million SVIP subscribers TME reported in Q3 2024, meaning the tier’s penetration has jumped from 8% to approximately 12% of the firm’s total subscriber base in less than a year.

On TME’s earnings call yesterday, Executive Chairman Cussion Pang, CEO Ross Liang, and CFO Shirley Hu discussed the firm’s expansion far beyond traditional music streaming – into superfan services, concert promotion, and merchandise sales.

Here’s what we learned…

1. The bubble ‘superfan’ service could become a “key growth driver” for SVIP subscriptions

TME partnered with SM Entertainment-affiliate DearU to launch superfan app “Bubble” in China on QQ Music in June.

A clear rival to HYBE’s Weverse, TME executives see the service as having significant potential to drive premium subscription growth.

The Bubble feature, integrated into QQ Music, “enables users to engage directly with hundreds of K-pop artists from labels such as SM, JYP and CUBE Entertainment, providing artists an avenue to share members-only content,” according to Pang’s prepared remarks.

DearU’s Bubble is designed specifically for superfans, allowing them to view livestreams and exchange messages with artists for a monthly fee.

The service has gained traction across the K-pop industry, with SM Entertainment recently acquiring an additional 11.42% stake in DearU for around $92 million in March. The deal raised SM’s stake in DearU to 45.1%. (SM already held a 33.7% stake in the company via its subsidiaries SM Studios, SM Japan, and Everysing Japan prior to the latest transaction.

Bubble, launched in February 2020, reportedly had around 2.3 million subscribers as of the second half of 2023.

TME has plans to expand beyond K-pop, with Pang noting: “To cater to a wider audience, we also plan to invite some popular Chinese artists to the community, allowing them to foster a deeper and more personal connections with their fans.”

Crucially for TME’s monetization strategy, the company appears to be bundling Bubble access with its higher-priced premium subscriptions. “We also have the bundled service for Bubble and [TME’s] subscription and SVIP business. And we do hope such a bundled service would become a key growth driver for the future SVIP growth,” Pang explained during the Q&A session.

2. Tencent Music is quietly evolving into a serious concert promoter in multiple markets

TME is aggressively expanding into live events and merchandise, with Pang revealing that revenues from these newer business lines “more than doubled from a year-over-year basis, which really validates our strategy of building a comprehensive music entertainment platform.”

The company’s most high-profile live event so far was G-DRAGON’s three sold-out nights at the Galaxy Arena in Macau, as part of the artist’s 2025 world tour, promoted by AEG Presents, TME live and Chessman.

Pang explained: “We successfully hosted leading Korean artist, G-DRAGON’s first major tour since 2017 in Macau, which attracted over 36,000 attendees to immerse in the cultivative atmosphere, and the event merchandise was quickly sold out.”

Tencent Music’s streaming platform QQ Music logged over 7 million users online simultaneously during the show.

This marked what Pang called “our first large-scale international concert production, significantly pushing our industry reputation”.

He added: “Following a strong kickoff, we are scheduled to expand the tour into other regions this year.”

Tencent Music’s live events arm, TME Live, is also involved in the G-DRAGON 2025 WORLD TOUR’s stops in Sydney, Melbourne, Taipei, Kuala Lumpur, Jakarta, Bangkok, and Hong Kong.

Beyond major international acts, TME is also investing heavily in domestic artists, with Pang noting: “We organized a series of stadium concerts for Fiona Sit, TIA RAY, and rapper GAI, helping them to reach a broader, younger audience. Due to the overwhelming demand, we quickly responded and worked with TIA RAY to schedule additional shows to accommodate fan interest.”

The company is also supporting emerging talent through its proprietary live event brands. “In the first half of the year, we leveraged our proprietary IPs, CITY LIVE and BUFF LIVE, to host over 300 off-line shows for nearly 100 Tencent musicians,” said Pang.

Physical album sales and merch have also contributed significantly, with CFO Shirley Hu noting: “The shipping for the physical album of Xiao Zhan this quarter, together with the offerings of artist-related merchandise, such as Joker Xue’s physical albums and G-DRAGON’s offshore light sticks significantly enhanced the revenues from artist-related merchandise sales in Q2.”

3. TME is piloting a ‘three-tier’ subscription model including a new “ad-based membership”

TME has quietly begun testing a new subscription tier that sits between its free and paid offerings, creating what executives described as a “3-tier membership system.”

When asked about the company’s advertising growth, CEO Ross Liang explained that TME had “started to pilot on the advertisement membership format” about two months prior to the earnings call.

“For ad-based membership, the ARPPU is relatively low, but it can provide a differentiated solution to different user groups,” the executive said.

Liang outlined TME’s vision: “For ad-based membership plus our standard member as well as SVIP, it’s a 3-tier membership system. It can help us to continue to broaden the size of our subscribers and the user. So this is indeed a very important strategic operational direction for us to go.”

However, the company emphasized this remains in early stages, with Liang noting: “I have to say it’s still in the infancy stage. If there’s any nice progress being made in the near future, we will surely share it with all of you.”

The move appears designed to capture users who might be willing to pay something but resist full subscription pricing – a strategy that could help bridge the conversion gap between TME’s free and paid tiers.

4. TME remains tight-lipped on its $2.4bn Ximalaya acquisition while awaiting regulatory approval… but explains the ‘SVIP’ strategy behind the deal

When asked about TME’s planned $2.4 billion acquisition of long-form audio platform Ximalaya, Executive Chairman Cussion Pang remained cautious, explaining that regulatory constraints limit what the company can discuss publicly.

“Regarding our deal with Ximalaya, according to the regulation in China, we’re still waiting for the further approval from the regulatory authorities. So now, it would be very difficult for us to make any corresponding comments,” Pang said during the Q&A session.

However, Pang did outline the strategic rationale behind the proposed acquisition, emphasizing TME’s belief in the value of long-form audio content. “The reason why we [have pursued] the Ximalaya deal is because, for the management team and for the whole company, we always believe in the value of long-form audio. Long-form audio is a very important content form. To us, it’s already played a complementary role to our existing music business.”

“Long-form audio is a very important content form.”

The company has observed growing engagement with long-form audio among its premium subscribers, with Pang adding: “We also see that consumption of the long-form audio and its penetration ratio with SVIP continue to go up.”

The acquisition, if approved, would significantly expand TME’s content offering beyond music into podcasts, audiobooks, and other spoken-word content – areas that have become increasingly important for global streaming platforms seeking to differentiate their services and improve user retention.

Reservoir (Nasdaq: RSVR) is a publicly traded, global independent music company with operations across music publishing, recorded music, and artist management. Music Business Worldwide