Popular online streaming services Tencent and Spotify announced that they were looking to acquire a 10% minority stake in each other’s companies.
The deal would see a union of sorts between two of the biggest online streaming services in the world.
While rumors are running thick over the value of the deal, no particular number has been confirmed yet. However, reports have stated that the companies plan to buy a 10% stake in each other’s companies.
The deal is an excellent one for Spotify, which already boasts close to 140 million users worldwide. However, with news of Apple’s rumored acquisition of Shazam breathing down its necks, Spotify needs to step up its game.
The deal with Tencent means that Spotify will manage to grow its reach in the Chinese consumer market. A similar view was expressed by veteran music industry analyst Mark Mulligan who is the managing director at MIDiA Research.
He stated, “China is very much missing a link for Spotify. As it progresses towards a public listing, that’s really a box it needs to have ticked to convince investors it really is a global player”.
While Spotify has a strong presence in over 60 regions around the world, China is not one of them. Tencent, however, is globally recognized to be China’s favored technology needs provider.
The company has managed to win consumer trust through its indispensable creation—WeChat. Additionally, Tencent Music Entertainment owns the music streaming companies, QQ Music and KuGou, which have a combined user base of 450 million a month.
Through Tencent Spotify gains more than just a monetary stake in a major company, it gains an entrance into a heretofore unexplored and lucrative market.