BookMyShow may face strong competition from Zomato after its acquisition of Paytm’s ticketing business. Zomato plans to leverage its customer base and profits from other businesses to scale its new going-out vertical, aiming to grow its order value to over Rs 10,000 crore by FY26.

BookMyShow, the leader in India’s entertainment ticketing market, could face intense competition from Zomato, which is acquiring Paytm’s ticketing business for Rs 2,048 crore and plans to build it into the company’s third main consumer vertical.

BookMyShow, which posted nearly Rs 1,000 crore in fiscal 2023 revenue and is profitable, will try to protect its market share by using its clout with suppliers and other stakeholders, and leveraging exclusive contracts with multiplex chains, event organisers, sporting bodies, artists and theatre companies among others, analysts and industry executives said.

Meanwhile, Gurugram-based Zomato will seek to utilise profit from its other mature businesses like food delivery to scale the going-out segment that includes the dining out and entertainment ticketing verticals.

In a shareholder letter published on Wednesday, Zomato’s chief executive Deepinder Goyal said the company anticipates the gross order value of its going-out vertical to grow more than threefold to over Rs 10,000 crore by FY26.

“…we see the going-out business as a combination of multiple categories with strong network effects – with some categories driving traffic and certain categories driving profits. Idea is to drive profitability at a combined level while allowing for different sub-categories to operate at different margin profiles,” Goyal said.

The deal will give the company increased access to the lucrative movie and event ticketing business, which comprises nearly two-thirds of the going-out segment.

“Movies and event ticketing is the biggest business…close to two-thirds of the revenue comes from convenience fees from movies and event ticketing. Live events would be the remaining 30% of the business,” said Karan Taurani, senior vice president at Elara Capital.

Holding the fort

Currently, Reliance Industries and Accel-backed BookMyShow is the market leader in the movie ticketing segment with a 75% market share, followed by Paytm Insider, as per Bernstein.

Paytm Insider is part of the businesses that Zomato is acquiring.

In the online ticketing segment, the proxy of which is the Rs 1,500 crore convenience fee – including movies, events and sports — BookMyShow has 40-45%, said Taurani.

In FY23, the company’s operating revenue surged to Rs 976 crore from Rs 277 crore in FY22. BookMyShow swung to a profit that year as it rebounded from the impact of the pandemic-induced lockdowns and challenges to its operations in the preceding few years.

With this, the 25-year-old venture brings in inherent advantages.

“They’ve been a large player in this segment…and have sizeable traffic across all segments,” a media and technology sector analyst said. “For a lot of cinema chains, BookMyShow accounts for a larger share of ticket sales than Paytm. They also have a number of exclusive contracts…including with BCCI (Board of Control for Cricket in India) to sell tickets for tournaments, including IPL.”

Zomato’s playbook

“While Paytm Insider has been a good and respected product among the community…there hasn’t really been a strong push for the business to grow at scale. Contrarily, the industry in which it operates is a fast-growing one. There’s a huge opportunity waiting to be addressed,” a senior creative director at a Mumbai-based marketing agency said.

Industry executives said Zomato will look at leveraging its existing customer base to drive users to the new going-out app, District, which is set to be launched in the next few weeks.

However, it will be equally important for the company to find exclusivity contracts and own live event properties.

“Zomato needs to get as many large properties as possible under their banner because BookMyShow has exclusivity on many large IPs (intellectual properties). Secondly, they can leverage the quick-commerce and food-delivery user base, and have a loyalty programme where you can have certain promotions if you’re a food or quick-commerce user,” Elara Capital’s Taurani said.

“Thirdly, they would really need to focus on niche live events that they do, and the food business. Differentiated events is an edge here and that will continue to be the USP (unique selling proposition) for Zomato,” he added.

Publicly listed Zomato has a cash pile of Rs 12,539 crore.

The company said the services initially will continue to be offered as is, but all the offerings will eventually be transitioned to the District app.

Goyal said part of the success of this acquisition would depend on a seamless transition of users from apps such as Paytm, Insider, TicketNew and Zomato to District.

“We might need to incentivise customers to move from Zomato/Paytm/Insider/TicketNew to District – but that is merely a marginal financial risk as of now, which we will try to eliminate as much as possible,” he said.