BookMyShow, which recorded nearly Rs 1,000 crore in revenue in fiscal year 2023 and is profitable, will try to protect its market share by using its influence with suppliers and other stakeholders, and leveraging exclusive contracts with multiplex chains, event organizers, sports entities, artists and theater companies, among others, industry analysts and executives said.
Meanwhile, Gurugram-based Zomato will look to use profits from its other mature businesses, such as food delivery, to scale the delivery segment that includes the dining-out and entertainment ticketing verticals.
In a letter to shareholders published on Wednesday, Zomato CEO Deepinder Goyal said the company anticipates that Gross order value for its outbound vertical will more than triple to over Rs 10,000 crore by FY26.
“We see the outbound business as a combination of multiple categories with strong network effects, with some categories driving traffic and certain categories driving profits. The idea is to drive profitability at a blended level while allowing different subcategories to operate at different margin profiles,” Goyal said.
The deal will give the company greater access to the lucrative movie and event ticketing business, which comprises nearly two-thirds of the outlet segment.
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“Movie and event ticketing is the largest business… about two-thirds of the revenue comes from convenience fees from movie 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
At the moment, Reliance Industries and Accel-backed BookMyShow is the market leader in the movie ticketing segment with a market share of 75%, followed by Online payment Insider information, according to Bernstein.
Paytm Insider is part of the businesses that Zomato is acquiring.
In the online ticketing segment, which is represented by the Rs 1,500-crore convenience fee segment, including movies, events and sports, BookMyShow has 40-45% share, Taurani said.
Electronic technologyIn FY23, the company’s operating revenue increased to Rs 976 crore from Rs 277 crore in FY22. BookMyShow posted profits in the year as it recovered from the impact of pandemic-induced lockdowns and challenges to its operations in the previous years.
The 25-year-old company thus offers inherent advantages.
“They have been a major player in this segment… and have considerable traffic across all segments,” said a media and technology industry analyst. “For many 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 the IPL.”
The Zomato Playbook
“While Online payment “Insider has been a good and respected product among the community… there hasn’t really been a strong push to grow the business on a large scale. On the contrary, the industry it operates in is one of the fast-growing ones. There is a huge opportunity waiting to be addressed,” said a senior creative director at a Mumbai-based marketing agency.
Industry executives said Zomato will look to leverage its existing customer base to attract users to its new going-out app, District, which is set to launch in the coming weeks.
However, it will be equally important for the company to find exclusivity contracts and own properties for live events.
“Zomato needs to get as many big properties under its brand as possible because BookMyShow has exclusivity on a lot of big IPs. Secondly, they can tap into the fast commerce and food delivery user base, and have a loyalty programme where you can have certain promotions if you are a fast commerce or food delivery user,” said Taurani of Elara Capital.
“Thirdly, they would really have to focus on the niche live events they do and the food business. Differentiated events are an advantage here and that will remain the USP (unique selling proposition) for Zomato“, he added.
Listed Zomato has a cumulative cash stack of Rs 12,539 crore.
The company said the services will initially continue to be offered as is, but all offers It will eventually move to the District app.
Goyal said part of the success of this acquisition will depend on a smooth transition of users from apps like Paytm, Insider, TicketNew and Zomato to District.
“We may need to incentivize customers to move from Zomato/Paytm/Insider/TicketNew to District, but that is just a marginal financial risk for now, which we will try to eliminate as much as possible,” he said.
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