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.

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.”

“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.

Food delivery company Zomato is in advanced negotiations to acquire Paytm’s movie ticketing and events division as the Deepinder Goyal-led firm looks to double down on its ‘going-out’ businesses, according to two people in the know. The deal may value Paytm’s vertical at Rs 1,600-1,750 crore, they said. Adding receivables from cinema exhibitors, the valuation could go up to Rs 2,000 crore, they added.

A formal announcement is expected later this month, perhaps as early as this week.

Zomato and Paytm spokespersons declined to comment.

“Paytm Movies and Paytm Insider are being merged to bring in synergies between the two teams,” said one of the persons cited. “The idea is to build this as a single unit… Zomato’s interest in this segment has been there for a while so it fits in very well.”

Zomato has been looking to capture consumer demand across categories such as food, grocery and entertainment.

If the transaction goes through, it will be among the largest buyouts for Zomato after it acquired Uber Eats in 2020 and took over quick commerce platform Blinkit (then Grofers) in 2021 in an all-stock deal for Rs 4,447 crore.

Noida-based One97 Communications, which runs Paytm, began to push events and movie ticketing inorganically. It bought a majority stake in Insider.in, an online ticketing and events platform backed by event management company Only Much Louder (OML), for a little over Rs 35 crore in 2017. A year later, Paytm acquired Chennai-based online ticketing platform TicketNew to bulk up its entertainment ticketing business. OML subsequently cashed out to be a part of the KKR-backed platform Emerald Media.

Paytm Movies is the closest competitor to segment leader BookMyShow (BMS) in the movie ticketing segment. The Mumbai-based company, which counts Reliance Industries as well as venture capital funds like Accel and Elevation as its backers, clocked operating revenue of Rs 976 crore and profit of Rs 85.72 crore in FY23. BMS is in the process of closing a funding round in which private equity firm KKR is buying out existing shareholders, valuing the Ashish Hemrajani-founded company at Rs 7,500 crore

Zomato offers ticket-booking services for events, along with running a food festival called Zomaland. It organized American musician Post Malone’s India tour in December 2022 and has been keen to make events and entertainment its fourth pillar.

The Gurgaon-headquartered firm separately reported numbers for its going-out vertical for the first time for the September 2023 quarter. Zomato’s Goyal had said at the time that the combination of dining out, events and ticketing could be the “fourth large business coming out of Zomato.”

Food ordering, Blinkit and Hyperpure, which provides supplies to restaurants, are the other three verticals for the food delivery firm.

“Zomato’s strategy is to take as much control of the customer’s discretionary spending wallet as possible,” said an executive.

“It already has 18.4 million average monthly transacting customers in its food delivery business in FY24. In quick commerce, it’s already the market leader with over 6 million average monthly transacting customers (Q4, FY24) and is looking to double its dark store footprint to 1,000 pan India over the next year. It sees this space as a quasi monopoly with BMS and feels it can take on competition in a duopoly situation. It already has a massive customer base to cross-sell the various services.”

According to Ormax, the Indian box office grossed a record Rs 12,226 crore in 2023, surpassing even pre-Covid numbers and marking the first time it exceeded Rs 12,000 crore.

In 2019, the Indian film industry’s gross box office collections were at Rs 10,948 crore. The live event segment can reach Rs 14,300 crore by 2026, as per a FICCI-EY report as sports events such as the Indian Premier League (IPL), the cricket World Cup, the football India Super League (ISL) and the Kho Kho league cater to an increasing number of fans. Live music concerts, curated events and international and homegrown festival franchises -- Lollapalooza, NH7 Weekender and Magnetic Fields among others -- have gained traction since Covid.

Paytm Marketing Services -- erstwhile cloud and commerce -- includes deals and gift vouchers and ticketing for travel, movies and events, advertising and credit card marketing, among others. Revenue from marketing services in FY24 stood at Rs 1,734 crore while FY23 revenue for Wasteland Entertainment Pvt, the entity running live events platform Insider, was Rs 192.7 crore, up from Rs 48.6 crore a year before.

From organising treks, comedy events, dine-out and other immersive experiences, and weekend gateways to hosting global acts like UB40, 50 Cent and Ronan Keating at festivals, clubs, gigs and concerts, Paytm has diversified into this fast-growing space in recent years.

Nearly 83% revenue at the overall level at ⁠One97 Communications in FY24 came from payments and financial services, which includes payments, credit, insurance and wealth management. The remaining 17% was from marketing services. Another person familiar with the deal said that the Paytm board wants the Vijay Shekhar Sharma company to focus on its core payments and financial services businesses.

Paytm’s payments bank was banned from operating on January 31 by the country’s central bank due to continued regulatory lapses. Since then the fintech major has been hit by a slowdown in two of its core businesses-merchant payments and consumer lending, according to its quarterly exchange filings. It expects an EBITDA loss before Esop costs of Rs 500-600 crore in the June quarter.

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Mumbai: Paytm is in advanced stages of discussion to sell its movie and events ticketing business to Zomato as part of the fintech's strategy to divest its non-core assets, sources aware of the development told TOI. The deal, if finalised, could value the business vertical of Paytm at close to Rs 2,000 crore.

In a stock exchange filing late Sunday, Zomato said that it is in discussions with Paytm to acquire its movies and events ticketing business. The discussion, the firm said, is being undertaken with an intent to strengthen its 'going-out' business. "However, no binding decision has been taken at this stage that would warrant a board approval and subsequent disclosure," Zomato added.

In a separate filing, Paytm also said that the discussions are preliminary and do not involve any binding agreements that require approval or disclosure. "The company routinely explores various strategic opportunities aimed at enhancing shareholder value. The potential transfer of Paytm's entertainment business, a component of our marketing services, is one opportunity under consideration. As noted in our earnings call, our focus will be on payment and financial services along with digital goods commerce, which are designed to help our merchants scale their businesses," the firm said.

"Paytm wants to focus on its payments and financial services businesses. It will only focus on opportunities which would help its merchants scale their businesses," sources said. For Zomato, the deal will add value - acquiring Paytm's movie and events ticketing verticals would fit in well with and give a leg-up to its going-out business, analysts said. The food delivery firm's 'going-out' vertical already offers discovery and ticketing of offline experiences such as in-restaurant dining and live events such as Zomaland.

Revenues from its going-out segment have grown by over 100% year-on-year to Rs 93 crore in the March quarter. "Paytm is currently merging its movies and the Insider (events platform) vertical into one team. For now, customers may continue to book both movies and events on the Paytm app," sources said.

However, Zomato is likely to work on integrating the two verticals within its platform once the deal is through, they added. A formal announcement of the deal could happen as early as next week, sources said.