After seeing downtime during Covid times for around two long years, out-of-home entertainment players like BookMyShow and Paytm saw a strong jump in customer activity. People who have missing fun activity, after lifting of lockdown rushed to concerts, sports, and movies complexes. Zomato, which has been involved in ticketing business for more than a year now has been in search to expand its going-out business. The company in a circular to exchange on August 21 announced that it will acquire Paytm's ticketing and entertainment business for Rs 2,048 crore. Zomato is focusing on a new going-out app called "District" to address the diverse use cases of customers. The founder believes in building a comprehensive app for going-out services to compete with platform like BookMyShow. The company wants to expand its services beyond its core food delivery and quick commerce business. The transition process of Paytm's entertainment and ticketing business to Zomato's District app is estimated to be completed in the next 12 months with 280 of its employees joining Zomato.
BookMyShow which is an old player and has an edge in the entertainment ticketing business. Reliance-backed BookMyShow dominated on around 70% of online movie ticketing and over half of online event ticketing. Zomato latest acquisition is estimated to be one-fourth the size of market leader BookMyShow. According to research reports, there is potential for the ticketing business to draw a healthy growth of 15-20% in the near-to-medium term.
On being asked about success rate of acquisition, Deepinder, CEO of Zomato said, the success of the new team will involve a successful transition of customer traffic from current platform to the District app. For increasing its success probability they have hired Rahul Ganjoo and Pradyot Ghate, who were instrumental in the Uber Eats transition. They may introduce incentive for smooth speeding of transition. Foremost important thing he motioned was that they are more betting on the team this time. In earlier acquisition they were either in touch with the team or else they took the platform and didn’t acquire the team.
Zomato is set to launch its "going out" business under the new name and app, District, to capitalize on cross-selling opportunities. The app will allow customers to discover and book restaurants, movies, sports events, and live performances. With a solid customer data and carrying rand value of Zomato, it can effectively pitch new services to its existing loyal customers. The company already operates a "going out" vertical, which focuses on dining out and Zomato Live. Companies’ going-out segment grew by 51% YoY in FY24, reaching INR 258 Cr in revenue. The new app and recent acquisition will help Zomato capitalize on the growing online ticket market in the country, which is growing at an annual rate of 15-20%. The exact date hasn’t been announced yet but as per indication it will be rolled out in few weeks.
The deal would shore up Paytm's cash position, which could be used to scale up rewards/cash-back programs to revive its dwindling payment business following the RBI action. Shares of Paytm after gap up opening is trading lower at Rs. 565 and Zomato share is trading at Rs. 258, with YTD gain of 107%.
