How Zomato-Paytm Deal Can Disrupt BookMyShow's Monopoly 

Food delivery platform Zomato is all set to acquire Paytm’s entertainment and ticketing business for Rs 2,048 crore.

With this acquisition, Zomato is planning to increase its presence in the going-out segment. Paytm, on the other hand, will be focusing on its core payments as well as financial services distributions. 

Zomato is already a household name in India, thanks to the success of its food delivery service and quick commerce platform, Blinkit. The company has the potential to further penetrate the 'going out' segment and compete directly with the movie ticketing platform BookMyShow.

However, before diving into that, it's important to recognise the growing prominence of the going-out segment in India—a key takeaway from this deal.

Zomato CEO Deepinder Goyal said in an investor call, “We believe, over the next decade and beyond, going-out experiences will continue to grow strongly in lockstep with overall growth in lifestyle and consumption.” 

Rise of Going Out Segment in India 

The going-out business that includes sports, live concerts, movies, and more, has been increasing since the Covid-19 pandemic. As per experts, this increase is indicative of a larger trend in which people are looking for more entertainment options, especially now that the limitations have loosened following the pandemic.

Read: Zomato Set To Acquire Paytm's Entertainment and Ticketing Business For Rs 2,048 Crore

“The rising disposable income and changing lifestyle preferences among urban consumers further bolster this expectation," says Somdutta Singh, founder and CEO of Assiduus, a platform that offers cross-border e-commerce solutions.

The organised live events segment grew 20 per cent, exceeding pre-pandemic levels, to touch Rs 8,800 crore in 2023, as per a FICCI-EY report that was published in March 2023. The report attributes this growth to government functions, personal celebrations, weddings, and ticketed events, including numerous international shows and acts held in India.

Read: Zomato Collected Rs 83 Crore as Platform Fee from Customers till March, Says Report

Live events are also getting audiences in tier 2 cities, including Surat, Jaipur, Ahmedabad, Ayodhya, Cochin, and others. Additionally, a report by Ormax says that India had an estimated 157.4 million moviegoers in 2023, a 29 per cent increase from the previous year and 8 per cent higher than pre-pandemic levels.

Speaking at the Startup Mahakumbh, Ashish Hemrajani, the founder and CEO, BookMyShow reportedly said that live entertainment and sports are rapidly becoming major sources of entertainment for the youth. BookMyShow has been a consistent presence in this space since 1999, but with this deal, Zomato is poised to become a direct competitor.

The Monopoly of BookMyShow 

Started by Ashish Hemrajani, Parikshit Dar, and Rajesh Balpande, BookMyShow has been the go-to place for Indians when it comes to booking movies, events, plays, sports, and other activities. In the early 2000s, the company’s focus was on movie ticketing business. Eventually, it expanded to sports and other segments. 

According to media reports, the company achieved a net profit of Rs 85.72 crore in FY23, recovering from a loss of Rs 92.2 crore the previous year. Moreover, the company's operating revenue saw a significant increase, more than tripling to Rs 976 crore for the fiscal year ending March 31, up from Rs 277 crore in FY22. 

The ticketing platform did face a threat to its survival in the past, but it was not from any direct competitor. Rather, it was the external conditions that caused hurdles to it. Be it the dot-com bubble burst in the 2000s or the Covid-19 pandemic.

In 2015, Paytm entered this space after acquiring events start-up Insider.in for a sum of Rs 35 crore. As Paytm went on acquiring and expanding and giving various cashback offers to consumers, BookMyShow was seeing a competitor in India. 

Read: Paytm to Restructure Salaries of Board of Directors: Report

However, ever since its IPO came up in 2021, Paytm’s focus on this segment decreased. Eventually, the company was also facing lots of regulatory hurdles, which slowed down its business. On January 31, the Reserve Bank of India placed restrictions on Paytm Payments Bank due to ongoing non-compliance with KYC regulations. Subsequently, in March, the National Payments Corporation of India (NPCI) granted approval for Paytm to operate as a third-party payment aggregator. Following this incident, Paytm's focus is now back on its finance vertical and BookMyShow has been maintaining its dominance.

Companies are seeing potential in the going-out segment and investing in the same. That’s that. But now the question arises: Will Zomato be able to break the monopoly of BookMyShow with more than 30 million customers? 

The Entry of Zomato 

Zomato is not a new player in this business. Recently, the food delivery platform announced a Rs 100 crore investment in its entertainment division, Zomato Entertainment, a subsidiary focused on selling and curating tickets for concerts, parties, and festivals.

Zomato's going-out business reported adjusted revenue of Rs 95 crore, up from Rs 93 crore in the previous quarter. This marks a significant increase from Rs 42 crore in the same period last year.

Zomato already benefits from its widespread popularity in both grocery and food delivery services. The company also reported a net profit of Rs 253 crore in the April-June quarter, a significant increase from the Rs 2 crore profit reported in the same quarter last year. 

“Zomato's acquisition could leverage its existing customer base and data analytics capabilities to create a more integrated and user-friendly experience for consumers. If Zomato can execute its strategy effectively—enhancing customer experience and offering competitive pricing—it could carve out a significant share of the market,” adds Singh. 

To amplify its presence in this area, Zomato will try to push its new ‘District’ app. The main purpose of the app, as per Goyal, is to boost customer engagement and demand in the going-out space. “We want to position ‘District’ as the brand that consumers turn to when they are thinking of going-out,” he added in an investor call. 

Experts suggest that Zomato’s entry into the entertainment and ticketing market could attract more players into this space. Singh notes that Zomato’s acquisition might set a precedent, inspiring competitors to adopt similar strategies. Companies offering innovative solutions, such as improved user experiences or unique event options, could carve out a niche alongside established leaders like BookMyShow. While Zomato is optimistic about its new venture, the long-term success in the 'going-out' segment is yet to be determined.