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A 17.5% increase in streaming revenue helped WMG have a record quarter, they’re expecting even more growth in 2021.
Warner Music Group set a record for quarterly revenue of $1.335 billion in its fiscal first quarter (ending Dec.31st 2020). Streaming revenue shot up by a staggering 17.5% whilst total revenue grew by 6% (4% at constant currency).
However, Warner Music Group are looking to diversify into the gaming and sports industries, both are industries that use and feature music heavily. Warner invested $550 into Roblox, the popular video game that has 31.1 million daily users. They’re looking to turn a hefty profit once Roblox has a direct listing on the New York Stock Exchange. Warner also penned ideas with Varris, a fitness app that was launched by Equinox Media. In addition to this they have also signed licensing deals with Peloton, an in home fitness bike that streams workout classes. It was a smart move on Warners part to diverse into these areas, as both gaming and workout industries saw a boom during the pandemic and lockdowns.
In addition to all this, Warner also acquired EMP in 2018, the direct-to-consumer merchandise store. This no doubt helped offset losses in expanded rights recording contracts from the touring hiatuses across the globe.
However, streaming services such as Spotify, Apple Music, Youtube Music and Amazon will be their main sources of income and will see the largest areas of growth. Especially as Spotify looks to establish themselves in developing music markets in countries like South Korea. As well as Amazon Music’s push into high-definition streaming and music video expansion.
Here are the companies fourth quarter takeaways:
- Net income down 19% from $122 million to $99 million.
- Operating income before depreciation and amortization rose 13% from $236 million to $267 million.
- Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 19% from $249 million to $297 million.
- Recorded music revenue up 7.1% from $1.26 billion to $1.34 billion. Its digital revenue grew 15% from $633 million to $727 million.
- Recorded music’s streaming revenue climbed 17.5%.
- Music publishing revenue up 1.2% from $173 million to $175 million. Its digital revenue jumped 36% from $73 million to $99 million.
- Music publishing’s performance royalties declined 35% “primarily due to COVID-related business disruption.”