Zomato to acquire Paytm’s entertainment ticketing business for $244 million

Zomato has announced it will acquire Paytm’s entertainment and ticketing business for Rs 2,048 crore ($244.2 million), marking a significant move in its strategy to diversify beyond food delivery and strengthen its presence in the lifestyle services market. 

The deal, approved by both companies on August 21, underscores a strategic shift for both Zomato and Paytm, each seeking to optimize their business models in an evolving market landscape.

For Zomato, the acquisition is part of a broader effort to expand into the ‘going-out’ segment, a market that encompasses dining, entertainment, and social experiences. 

This comes at a critical juncture as growth in the food delivery sector begins to plateau. 

Zomato’s move to integrate entertainment and ticketing into its portfolio represents a calculated effort to explore new avenues for revenue growth and user engagement.

Why Paytm is selling its entertainment and ticketing division

Paytm’s decision to sell its entertainment and ticketing division reflects a strategic pivot to its core financial services. 

The business, which includes movie ticketing and events, generated Rs 297 crore in revenue and Rs 29 crore in Adjusted EBITDA for FY24. 

Paytm initially built this segment through the acquisitions of Insider and TicketNew for Rs 268 crore between 2017 and 2018.

By divesting this non-core asset, Paytm aims to bolster its balance sheet and reinvest in its primary offerings, such as digital payments and financial services. 

The sale underscores Paytm’s focus on long-term value creation, aligning with its goal to strengthen its leadership in the fintech space. 

Notably, Paytm’s entertainment ticketing services will continue to be accessible on its app for up to 12 months during the transition period.

Will this acquisition help Zomato?

The acquisition is a key component of Zomato’s strategy to broaden its lifestyle services. 

The company recently launched ‘District,’ an app that consolidates its ‘going-out’ businesses, including dining and now, ticketing. Zomato’s CEO, Deepinder Goyal, emphasized that this move is central to the company’s vision of creating a unified platform for lifestyle services.

Zomato’s entertainment and ticketing segment is already showing promise, with a run rate exceeding $500 million in annualized Gross Order Value (GOV) and operating profitability. 

By acquiring Paytm’s entertainment business, Zomato aims to accelerate its revenue growth, though initial projections suggest only a modest 2.5 percentage point increase in consolidated financials.

Industry experts believe Zomato can further enhance its newly acquired business by integrating it with its existing services. 

Potential strategies include introducing a loyalty program, cross-selling food delivery services, and improving the discoverability of entertainment options. 

Such initiatives could increase user engagement and create a more holistic lifestyle experience for Zomato’s customers.

India’s live events and ticketing market is on an upward trajectory, driven by growing demand in Tier II cities, rising ticket prices, and the introduction of new entertainment and sports events. 

Zomato’s acquisition positions it well to capitalize on this growth.

In FY23, Zomato Live reported revenue of Rs 52.9 crore from selling 190,000 tickets.