June 25, 2024


Does Zomato’s potential deal with Paytm make sense?

It hasn’t been a good time for Paytm of late. Earlier this year, the company got in trouble with the Reserve Bank of India (RBI), which barred Paytm Payments Bank Limited. Then, its parent company, One97 Communications, announced a series of layoffs this month.

Now comes the news that the company is exploring selling its movie and ticketing business to Zomato. While we don’t know the deal’s valuation, it’s expected to be between ₹1,600 and ₹2,000 crore. India’s online entertainment ticketing business is ripe. Does this deal make sense for all parties involved?


The online ticketing market in India has grown quite significantly. In 2017, tickets for live entertainment like sporting events and concerts contributed almost $330 million of revenue to the broader online ticketing industry.

At the time, there were two big players – Paytm and BookMyShow. The former entered the market in 2016 and acquired a majority stake in Insider.in. For 2017, the company announced it sold over 52 million movie and event tickets, a 500% increase from the year prior. The company continued its shopping spree and bought Orbgen Technologies Private Limited, which operated Chennai-based TicketNew.

In the beginning, companies focused mainly on movies. That changed as they saw potential in sports and live events like concerts. Non-movie ticketing revenue began to see good growth as movies-on-demand saw an increase. BookMyShow, for example, partnered with artists like Justin Bieber and Ed Sheeran.

The pandemic forced companies in this sector to innovate. Live events weren’t happening, and they had to stay relevant. Before the pandemic hit, the event industry was estimated to be worth ₹10,000 crore, and ticketing platforms contributed about 20%. Companies pivoted to curating virtual events, online tournaments, and upskilling courses. They also used their customer base to promote OTT shows and podcasts.

As events and sports gradually returned, live entertainment saw record ticket sales and footfall. In 2022, 8 million people went to live entertainment shows across 19,000 events. This included events in tier 2 and 3 cities.

There’s clearly a lot of potential here. The news of Zomato’s interest in buying Paytm’s ticketing business is interesting, given the timing. Paytm has had to wade through rough waters over the past several months after facing heat from the RBI. The company also reported its first-ever sales decline last month.

Will this deal pose a threat to market leader BookMyShow? Does it even make sense for Zomato and Paytm?

VIEW: A win-win

From Paytm’s point of view, it needs to bounce back. Its CEO, Vijay Shekhar Sharma, said the company needed to streamline non-core assets. The RBI’s actions badly affected Paytm Payments Bank’s functioning, a significant component of the company’s operations. It forced the company to partner with other lenders. If the deal is successful, Paytm will be able to concentrate on travel, deals, and cashback. These are crucial spaces to expand its merchant base and boost sales.

From Zomato’s point of view, it’s somewhat unchartered territory. The live events ticketing space is a relatively new and rapidly growing digital sector. The company’s core business is obviously food delivery, which generates decent money, but the cash flows aren’t growing at a high rate. The platform already has a large built-in consumer base. You could see these two businesses combine for some unique offerings for customers.

Companies like BookMyShow will also face competition from multiplexes looking to woo customers directly. Zomato can leverage its established distribution network with Blinkit’s user base as a plus, to significantly scale up if it gets Paytm’s customers too.

COUNTERVIEW: Potentially risky proposition

BookMyShow is still India’s leading online ticket-booking platform for entertainment. Since its launch in 2007, it has amassed over 90% market share. So, it’s got a few things in its favour. Since it launched much earlier than Paytm’s entry into this sector, it had the first-mover advantage. That meant it established itself in over 600 cities and towns. That’s something Paytm doesn’t have, and it remains to be seen how well-integrated the business is within Zomato’s structure.

With BookMyShow’s presence comes a loyal customer base. Some estimates put that at over 30 million. A good chunk of people automatically go to the site or the app for their next outing. With that first mover came partnerships with event organising companies to provide exclusive offers across a diverse set of events. Financially, the company is going strong. It reported a 252% year-on-year growth in operating revenue in FY2023. 66% of this came from ticket bookings. Income from live events increased almost 10-fold.

Zomato does have some live event experience, but it’s nothing compared to others in the space. With BookMyShow in the final stages of a $300 million investment, it seems well-placed to continue its dominance leaving little room for Zomato-Paytm.

Reference Links:

  • It’s showtime for live entertainment in India! Business booming with record ticket sales, footfalls – The Financial Express
  • Paytm’s revenue, profitability may get affected due to RBI regulatory action: Vijay Shekhar Sharma – Business Today
  • Paytm’s market share continues to fall after RBI crackdown – Hindustan Times
  • Paytm in talks with Zomato to sell its movie and ticketing business – Mint
  • The Battle for “Going Out”: Zomato vs BookMyShow Heats Up with Paytm Ticketing Deal – Dazeinfo
  • Zomato-Paytm deal will be a win-win for both companies: Pankaj Murarka – The Economic Times

What is your opinion on this?
(Only subscribers can participate in polls)

a) Zomato’s potential deal with Paytm does make sense.

b) Zomato’s potential deal with Paytm doesn’t make sense.


For the Right:

BJP’s coalition partners may stop new laws curbing liberties being passed – but older ones remain

For the Left:

A smoother GST landscape