Can Zomato challenge BookMyShow with consolidated online ticketing and dining reservations?

Food, fun, and films—now, you will get them all on Zomato. The online food delivery platform announced in mid-June that it is in talks with digital payments platform Paytm to acquire the latter’s movie and event ticketing business.

“We acknowledge that we are in discussions with Paytm for the aforementioned transaction; however, no binding decision has been taken at this stage that would warrant board approval and subsequent disclosure in accordance with applicable law,” Zomato said in exchange filings.

If the deal goes through, it could have a significant impact on Zomato’s going-out business, potentially boosting its overall growth. “The above discussion is being undertaken with the intent to further strengthen our going-out business and is in line with our stated position of focussing only on our four key businesses currently,” stated the filing.

Paytm, too, has acknowledged the development. In a filing to exchanges on June 16, it said that the company routinely explores 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,” it said, adding that such discussions were “preliminary” in nature. It further said that Paytm’s focus will be on payment and financial services along with digital commerce.

Interestingly, this news came barely a week after Paytm, in partnership with Samsung, launched Samsung Wallet, enabling Samsung users to seamlessly book flight, bus, movie and event tickets. Currently, the going-out segment of Zomato’s business is divided into two categories: the dining-out business, which operates in both India and the UAE; and Zomato Live, which enables users to purchase tickets to events like food carnivals and musical concerts.

If the deal does go through, Zomato could potentially emerge as a significant competitor to BookMyShow, which currently dominates the growing online movie ticket booking market in India with a 60% share.

Founded in 2008, Zomato has made 15 acquisitions to date, with Blinkit being the most recent addition, per data intelligence firm Tracxn. Following that acquisition in 2022, Founder and CEO Deepinder Goyal said in a statement that it was “a natural expansion for the company.”

By entering the online movie and event ticket booking market, Zomato hopes to bolster its position among consumers, who frequently go out for entertainment and leisure activities. Leveraging data analytics and understanding consumer behaviour will significantly accelerate this growth. Zomato can use these insights to its advantage and further penetrate the “going-out” category by providing relevant deals, vouchers, and loyalty programmes, as both services serve this demographic.

In addition, integrating services within one app will boost user convenience and increase the conversion rate. Seamless navigation and consolidation of services like movie ticket booking and dining reservations into one platform can enable Zomato to leverage synergies, cross-promote services, and deliver a cohesive experience. This integrated approach will simplify decision-making for users, enhance brand loyalty and engagement, and ultimately drive sales and revenue.

What appears to be a distress sale for Paytm, as it gradually copes with the losses suffered due to the RBI crackdown, might turn out to be another ‘Blinkit bet’ for Zomato with effective operations. After its acquisition by Zomato, Blinkit’s annual revenue grew manifold—from `263 crore in FY22 to `2,300 crore in FY24, with its gross order value (GOV) soaring 97%. In a year, Goyal says, Blinkit will be bigger than Zomato’s food delivery business.

According to market analysis firm JM Financial, the deal is likely to bolster Zomato’s presence in the event ticketing space, as Paytm offers similar services to Zomato Live through its Paytm Insider platform. The firm’s BFSI analyst, Sameer Bhise, says, “With total revenue of `275-300 crore for the verticals in FY24, this implies a likely valuation of 5-7x of the FY24 sales. The deal would potentially add only 2.5% to Zomato’s FY24 consolidated revenue.”

Following the announcement of the discussion, Zomato’s shares climbed 1.5% on June 18 to a high of `189 apiece, while Paytm’s stock advanced 4.05% to hit `442.15.

Now, it’s showtime at Zomato. 

@sudi_journolife