Zomato’s move to acquire the movies and ticketing business of Paytm, will pose a big challenge to BookMyShow, which is the market leader in the segment. According to industry analysts, Zomato seems keen to scale up its live events and ticketing businesses, through its subsidiary, Zomato Entertainment, where it is also investing Rs 100 crore.
The reason why analysts are bullish about Zomato’s success in the live events and ticketing space, despite the dominance of BookMyShow is because the company has in the past has demonstrated success in areas where there are synergies with its existing businesses.
Zomato forayed into quick commerce by acquiring Blinkit and turned it around despite firms like Swiggy Instamart and Zepto having an early start. “Even though Zomato’s core proposition has been food, they have executed very well on the quick commerce side. So, if they eventually acquire Paytm Insider and execute well with superior customer experience, they can coexist with BookMyShow,” Karan Taurani, senior vice president and research analyst, Elara Capital told Fe.
While BookMyShow excels at ticketing, Zomato is envisioning a more comprehensive “going out” experience. And, by integrating event booking with its existing food delivery and restaurant discovery services, it may create a powerful ecosystem.
Additionally, its association with five-star hotels and luxury diners may also help in its live events business. “The ‘Zomato network effect’ is potent – the more you use it for various aspects of your ‘going out’ experience, the less likely you are to switch to another platform for specific needs. Zomato understands this and is strategically leveraging it,” Somdutta Singh, an investor and ex-member of Niti Aayog said.
Though BookMyShow enjoys at least a 60% market share in the online ticketing segment, in the live entertainment space, where it offers end-to-end solutions from organising to marketing events, it still has a smaller market share.
“Live entertainment is a smaller business for BookMyShow at present. Around two-thirds of its revenue from the events business comes from the online ticketing vertical,” Taurani said.
BookMyShow’s revenue from the events business increased to ₹237 crore in FY23 from ₹25 crore in FY22. On an overall basis, the company’s operating revenue stood at ₹976 crore in FY23.
For Zomato too, Zomato Entertainment, which organises food and music festivals, has so far been a smaller segment. Its overall market share in the live events sector would be less than 2.5%, point out analysts.
This explains its interest in Paytm Insider, which enjoys a market share of 8-10%. “Paytm Insider would be operating at a scale of at least three times as compared to Zomato,” Taurani said.
As earlier reported, Zomato is looking to acquire Paytm’s entertainment business, which offers services such as ticketing, sponsorship, artist booking and marketing, at a ₹1500 – ₹1900 crore deal size. Analysts believe this can be a good deal for Zomato, given Paytm Insider’s decent run so far.
In June 2017, the fintech startup picked up a majority stake in the events ticketing venture Insider.in, run by OML Entertainment. A year later, it acquired Chennai-based online ticketing startup TicketNew to focus on its entertainment ticketing business.
The firm sold more than 7.5 million tickets in 2019, with a 25% increase in the number of events ticketed from the previous year.
Further, Paytm Insider achieved over 100% growth in GMV each year over the last two years and increased its revenue by four times. It has also expanded to over 170 cities, including Tier 2 and 3 markets.
However, looking at the boom in live events, BookMyShow is also reportedly increasing its focus on its events vertical, both organising and ticketing.
Experts say that for Zomato, the focus is not on replicating Paytm’s past success or a head-on fight with BookMyShow, it’s about grabbing a decent market share. “It’s about acquiring a user base, technical expertise, and a foothold in the market. Paytm Insider becomes a stepping stone for Zomato and Zomato is smartly acquiring the infrastructure to build upon,” Singh added.