Zomato’s golden ticket: A bold play for the entertainment crown

On 21 August, Zomato, the hyperlocal delivery and discovery platform, announced a significant Rs 2,048 crore (USD 244 million) acquisition of fintech firm Paytm’s entertainment and ticketing business. This move, one of the largest in India’s mobile commerce and entertainment sectors, is poised to have far-reaching implications for the entire mobile entertainment and ticketing industry.

To fully grasp the potential impact of this acquisition, it is crucial to consider Zomato’s evolution as a key player in India’s mobile commerce landscape. Launched in July 2008 as a restaurant discovery startup, Zomato made its first major pivot in 2015 by entering the food delivery space nationwide. Its second major shift occurred in April 2022, when it ventured into the burgeoning ‘quick commerce’ segment.

Zomato plans to transform Paytm’s business into a separate vertical called District under the company’s ‘going-out’ business category.

Over the years, Zomato has secured nearly USD 788 million in venture capital funding from investors like Info Edge, Sequoia Capital (now Peak XV Ventures), Temasek, and Tiger Global. Its major acquisitions include the US-based food platform Urbanspoon in 2014, Uber Eats’ India business in 2020, a minority stake in grocery listing and delivery platform Grofers in 2021, quick commerce upstart Blinkit in 2022, and now, Paytm’s entertainment vertical.

The Business Opportunity

Zomato’s acquisition of Paytm’s entertainment and ticketing business, its second-largest following the Blinkit takeover, presents a strategic expansion opportunity for the company, which went public in July 2021.

According to media reports, Paytm’s entertainment and ticketing vertical reported a gross order value of Rs 2,000 crore in FY24 and over 10 million unique customers. For Zomato, this acquisition offers a fast track to acquiring a substantial user base in a vertical where it has had a limited presence.

As Zomato integrates these new offerings, users can expect more personalised experiences driven by data-backed targeted marketing.

The current leader in the mobile entertainment ticketing space is BookMyShow, with an estimated 30 million active unique customers. The company reported a net revenue of Rs 1,026 crore and a net profit of Rs 85 crore in FY23. With a profitable competitor already established, Zomato’s entry into this market may not be smooth sailing.

However, Zomato’s strength lies in its highly successful core business and expertise in mobile commerce. Industry estimates suggest that Zomato’s main app and its Blinkit sub-domain have a combined net active user base of 80 million.

Upon announcing the acquisition, Zomato’s CEO, Deepinder Goyal, revealed plans to transform Paytm’s business into a separate vertical called ‘District.’ According to Goyal, this is defined under the company’s “going-out” business. To build traction for the service, Zomato plans to initially keep it within its main app but eventually spin it off into an independent service.

To Zomato’s vast user base, this means more than just food delivery. Soon, they will have access to a wider range of experiences—from movie tickets to concert passes—all within a single app, enhancing convenience and engagement.

The business potential is evident. With India’s 750 million active smartphone users—a number that continues to grow—mobile commerce is poised for significant expansion. As Internet penetration increases, services like Zomato and its newly formed District will continue to attract new audiences. Additionally, the growing disposable incomes among one of the world’s largest middle-class populations will likely further boost such mobile commerce ventures.

The Right Step Forward

Many believe Zomato’s acquisition is a strategic move at the right time. A senior executive at a Mumbai-based brokerage firm, who requested anonymity, commented on the deal, highlighting its potential.

“If you consider mobile commerce for physical experiences, there are not many organised players in the market apart from BookMyShow. Insider is not aggressive in its marketing, and most other services function primarily as listing platforms rather than actively driving ticket sales. This is where Zomato excels—creating campaigns that engage users and encourage participation,” the executive noted.

Zomato’s bold move aims to merge convenience with entertainment in ways that could set new industry standards in mobile commerce.

But can Zomato falter in due process? For one, there is the concern that getting ‘District’ up and running as a standalone service will require substantial upfront investment to build brand recognition and encourage users to download and adopt the service. Additionally, BookMyShow, with its extensive experience in the sector, may intensify its efforts to secure exclusive events and shows, creating a competitive environment.

Yet, this competition could be advantageous for Zomato. The executive further said, “Any competition is good for Zomato. It initially attracted users with discounts and free deliveries in the food delivery business, gradually introducing service fees. Even their coupon strategies are carefully crafted—they offer just the right amount to make you want to place an order. This tactic may work very well in the events and ticketing space.”

“For instance, Zomato might consider offering a ‘season pass’ for stand-up comedy—if priced right, it could attract many buyers. However, not all season pass holders will show up at all events they may be entitled to attend, a strategy that expands margins significantly. If there is one company that can pull off viral marketing, it is Zomato,” he concluded.

Moreover, as Zomato integrates these new offerings, users can expect more personalised experiences driven by data-backed targeted marketing. Whether one is looking for a dining deal or an entertainment escape, Zomato could soon become your go-to platform for both.

With the increasing use of data-driven targeted marketing in events and other domains, Zomato is positioned to capitalise on a lucrative gold mine of opportunity across the entire gamut of mobile commerce. While the outcome of this venture remains to be seen, Zomato’s bold move signals its ambition to redefine user experiences in India’s mobile commerce sector, merging convenience with entertainment in ways that could set new industry standards. For now, the stage is set for Zomato to seize the moment.

By Vernika Awal

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