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Home » » Universal Music: Streaming Drove Revenue Growth

Universal Music: Streaming Drove Revenue Growth

Written By VDotNam Jones on Saturday, February 27, 2016 | 23:07

Gains from streaming and Subscription services more than offset declines in physical product and digital downloads.

Streaming and subscription services led Universal Music Group to a modest gain in 2015, accounting for 52 percent of the company's digital recorded music revenues in the second half of the year. The revenue figure and digital milestone were released in Thursday's earnings release by parent company Vivendi.
UMG's revenues were €5.11 billion ($5.66 billion), up 2.7 percent at constant currency, a measure that eliminates foreign currency fluctuations which can impact earnings reported a single currency. Revenue was up 12.1 percent as reported by Vivendi. The 43 percent growth in subscription and ad-supported streaming revenues "more than offset" declines in physical products and digital downloads.
The company characterized itself as having "positive momentum in the business" and believes it will achieve "enhanced results in 2017 and beyond."
All three core segments of Universal Music's business reported gains. Recorded music revenues were up 2.4 percent to €4.11 billion ($4.56 billion -- all earnings numbers will be reported at constant currency). Music publishing revenues rose 3.0 percent to €756 million ($839 million). Revenue at the "Merchandising and other" category grew 3.5 percent to €276 million ($306 million). Income from music operations fell 0.6 percent to €626 million ($694 million). Cash flow from UMG's operations increased 33 percent to €567 million ($629 million).
Streaming and subscription services accounted for 24 percent of UMG's total recorded music revenues in the second half of the year, double its share in the first half of 2015. Downloads' share of revenue shrank to 18 percent from 24 percent. Physical product's share fell modestly to 38 percent from 42 percent. Licensing rise slightly to 17 percent from 16 percent.
Three-quarters of UMG's revenues came from 5 countries: the U.S., the U.K., France, Germany and Japan. North America's share of revenue grew to 42 percent from 39 percent. Europe shrank an equal amount to 39 percent. Asia remained at 9 percent.
The emerging "BRIC" markets of Brazil, Russia, India and China accounted for just 3 percent of UMG's revenue. UMG believes emerging markets will grow through global and local streaming services and more favorable copyright laws in some countries.
Vivendi's revenue was €10.8 billion, up 1.4 percent. The company is facing a challenge in France with falling subscriber counts to its bread-and-butter Canal+ cable channels. Canal+ Group revenues fell to 454 million from 583 million as the EBITA of Canal+ channels in France fell to -€264 million from -€188 million.

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