Zomato Poised To Challenge BookMyShow's Dominance

EE News Desk Jun 19, 2024

While BookMyShow dominates in ticketing services, Zomato envisions a broader ‘going out’ experience

As per media reports, Zomato's acquisition of Paytm's movies and ticketing division presents a significant challenge to BookMyShow, the current leader in the market. Industry experts believe that Zomato is eager to expand its presence in live events and ticketing, particularly through its subsidiary, Zomato Entertainment, which is investing Rs 100 crore in the venture.

Analysts are optimistic about Zomato's prospects in the live events and ticketing sector despite BookMyShow's dominance. This confidence stems from Zomato's track record of success in areas that align with its existing ventures.

Zomato ventured into quick commerce by acquiring Blinkit and successfully revitalised it, despite competitors like Swiggy Instamart and Zepto gaining an early foothold. “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,” pointed out Karan Taurani, Senior Vice President and Research Analyst, Elara Capital, in the media report.

While BookMyShow specialises in ticketing services, Zomato aims to offer a broader ‘going out’ experience. By merging event bookings with its established food delivery and restaurant exploration services, Zomato could establish a robust ecosystem.

Moreover, its partnerships with five-star hotels and upscale dining establishments could further bolster its live events division. “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,” underlined Somdutta Singh, an investor and ex-member of Niti Aayog.

While BookMyShow commands at least 60 per cent of the market share in the online ticketing sector, its presence in the live entertainment domain, where it offers comprehensive solutions from event organisation to marketing, is comparatively smaller.

Taurani brings out that live entertainment currently constitutes a smaller portion of BookMyShow's business. Approximately two-thirds of its event business revenue is derived from the online ticketing segment.

BookMyShow's revenue from the events sector surged to Rs 237 crore in FY23 from Rs 25 crore in FY22. In total, the company reported operating revenue of Rs 976 crore in FY23.

Zomato Entertainment, known for organizing food and music festivals, has historically been a smaller segment for Zomato. Analysts estimate that its market share in the live events sector is less than 2.5 per cent.

This explains Zomato's interest in Paytm Insider, which holds a market share of 8-10 per cent. According to Taurani, Paytm Insider operates at a scale at least three times larger than Zomato Entertainment.

Zomato is reportedly seeking to acquire Paytm's entertainment business, which includes ticketing, sponsorship, artist booking, and marketing services, in a deal valued between Rs 1500 and Rs 1900 crore. Analysts view this potential deal positively, considering Paytm Insider's successful track record.

In June 2017, the fintech startup acquired a majority stake in Insider.in, an events ticketing venture operated by OML Entertainment. A year later, it expanded its entertainment ticketing business by acquiring TicketNew, a Chennai-based online ticketing startup.

In 2019, the company sold over 7.5 million tickets, marking a 25 per cent increase in ticketed events compared to the previous year. Additionally, Paytm Insider experienced over 100 per cent growth in Gross Merchandise Value (GMV) annually for the past two years, achieving a fourfold increase in revenue. Its reach has expanded to include over 170 cities, encompassing tier II and III markets.

However, with the surge in live events, BookMyShow is reportedly intensifying its focus on its events vertical, both in organising and ticketing.

Experts suggest that Zomato's objective isn't to replicate Paytm's past success or directly compete with BookMyShow. Instead, it aims to secure a significant market share. Singh explained that Zomato's focus is on acquiring a user base, and technical expertise, and establishing a foothold in the market. Acquiring Paytm Insider serves as a stepping stone for Zomato, allowing it to strategically build upon existing infrastructure.