Tencent-UMG Investment: Chinese tech giant seeks stake in Vivendi subsidiary
Turning to online music. Tencent is negotiating with the French Group Vivendi to buy up to a 20 percent stake in its subsidiary, Universal Music. UMG owns the rights to such global stars as the Beatles, Madonna and Lady Gaga. What does the potential sale mean for the online music sector? The Head Quarter of Universal declined to comment since the negotiations are ongoing. CGTN's Stefan de Vries spoke to Arno Pons director of the Digital New Deal Foundation for his thoughts.
ARNO PONS, DIRECTOR DIGITAL NEW DEAL FOUNDATION "Less visible war that is even more critical certainly is that between the digital giants — the American GAFA, who are well known. A little less known in Europe are the BATX, the Chinese equivalents. Between them, there is a technological war and a fight for content. It is very strategic to be able to offer content on their platform, and this is the case with Universal, the world leader in music. The interest for Tencent is to obtain this valuable content. Music has very high value. Cinema, games and music are the three major entertainment contents in the world. They already have the games. Now thanks to Universal, they will have music. And that will eventually allow monetizing its audience. Tencent has hundreds of millions of users, who are subscribers, but for free. So the challenge now is to monetize them and make them pay for micro subscriptions on music."
"But they are only at the beginning because they have big means. The valuation of BATX today is three times lower than the Americans. But the GAFA's are hardly a reference. The valuation of BATX is historically high, so they have big ways to invest. And there's a lot of talk about the Silk Road, but another road that's just as important is the information highway. The Internet allows China to have global influence. This is the challenge."