Streaming Drives Universal Music Group Revenue Growth
Universal Music Group’s full year revenue in 2015 amounted to €5.11 billion (A$7.95 billion). It translated a rise of 12.1% as reported by the world’s largest music company’s parent company Vivendi, or up 2.7% at constant currency. It was helped with strong sales around the world for Taylor Swift’s 1989 and Justin Bieber’s Purpose.
The company said the 43% growth in subscription and ad-supported streaming revenues “more than offset” declines in physical products (which fell from 42% to 38%) and digital downloads (down to 18% from 24%).
Streaming and subscription accounted for 52% of Universal Music’s digital recorded music revenues and 24% of total revenue in the second half of the year. Both these were double what they’d been in the first half of 2015. Licensing was up by 1% to 17%.
The company characterized itself as having “positive momentum in the business” and believes it will achieve “enhanced results in 2017 and beyond.”
Universal Music Group reported gains in its three core divisions. Recorded music revenues were up 2.4% to €4.11 billion ($6.38 billion). Music publishing revenues was up 3% to €756 million ($1.17 billion). “Merchandising and other” rose 3.5% to €276 million ($428.9 million).
Income from music operations was down 0.6% to €626 million ($972.6 million). Cash flow from UMG’s operations increased 33% to €567 million ($912 million).
Three-quarters of UMG’s revenues came from 5 countries: the United States (which was up to 42% from 39%), the UK, France, Germany and Japan. Europe shrunk to 39% while Asia remained at 9%. “Emerging markets” Brazil, Russia, India and China accounted for just 3% but UMG says the growth of domestic streaming services and the entry of global services in these markets (along with “more favourable copyright laws” in some of these territories) would see strong growth in the future.
Vivendi’s revenue was €10.8 billion ($16.7 billion), up 1.4%, and was in line with expectations. It is facing a challenge in France where its important Canal+ cable channels continues to drop subscribers and revenue in the face of competition from global rivals.
In the last 12 months, Universal has gone through a period of global restructuring. Instead of non-US offices like Australia reporting first to its London-based international office, everyone now reports to UMGs HQ in Santa Monica. 50 staffers were reportedly pink-slipped. UMG boss Lucian Grainge says the new structure better deals with the music industry’s increasingly global operations.