Why is Zomato acquiring Paytm's entertainment ticketing business?

Deepinder Goyal-led food delivery giant Zomato is acquiring Vijay Shekhar Sharma-led Paytm's entertainment ticketing business for Rs 2,048 crore (or approximately $244 million).

Paytm's entertainment ticketing business includes movies, sports and events (live performances) ticketing.

Paytm's parent to transfer ticketing business to Zomato 

As part of this agreement, OCL will transfer its entertainment ticketing business to Zomato through a two-step process. First, OCL will transfer its entertainment ticketing business to its 100% subsidiaries, Orbgen Technologies Pvt Limited (OTPL) and Wasteland Entertainment Pvt Ltd (WEPL).

Second, OCL will sell its 100% stake in these subsidiaries—OTPL, which operates the TicketNew platform, and WEPL, which operates the Insider platform—to Zomato.

The transfer will also include approximately 280 existing employees from the entertainment ticketing business who will be part of the transition to Zomato.

The transaction value is subject to cash and net working capital adjustments at closing. Transaction closure is subject to satisfaction of agreed conditions precedent, the fintech major said in an exchange filing. 

Why is Paytm selling its ticketing business?

Paytm is selling its entertainment ticketing business as it wants to focus on payments and financial services distribution business.

In recent quarters, the company has also expanded its offerings in insurance, equity broking, and wealth distribution, with significant opportunity to cross-sell these services and grow its market presence as a leading financial services distribution player.

Paytm said that during a transition period, which is of up to 12 months, the movie and event tickets will continue to be available on the Paytm app, as well as on the TicketNew and Insider platforms.

"We built the entertainment ticketing business by addressing the market needs of the time. Today, as it transitions to Zomato ownership, we thank every team member who contributed to building this business. It has been a privilege to grow this business with an incredible team. This move allows us to continue focusing on long-term growth in our core areas and value creation for all stakeholders," Paytm's spokesperson said.

Financial performance of Paytm's entertainment ticketing business

Paytm developed its movie ticketing platform from the ground up and acquired TicketNew and Insider for Rs 268 crore between 2017 and 2018. 

The company made additional to further scale the business. The entertainment ticketing division achieved revenues of Rs 297 crore and an Adjusted EBITDA of Rs 29 crore in FY24. 

The transaction is expected to close within this quarter, subject to the satisfactory completion of all closing conditions, Paytm added.

CEO Deepinder Goyal highlights the reason behind acquisition

Zomato CEO Deepinder Goyal highlighted that the acquisition is not entirely new territory for the company, as it has already been involved in ticketing services for more than a year.

He said that the inclusion of dining-out and event ticketing has already shown significant growth, contributing Rs 3,225 crore to Zomato's GOV in FY24, growing at 136% YoY.

Zomato aims to expand its relevance by integrating more use-cases, such as movie and sports ticketing, which will be spun off into a dedicated app named 'District', which the company plans to launch in the next few weeks.

According to Goyal, the new app is designed to cater specifically to the "going-out" segment, a category that is still fragmented in India.

The company will be focusing on providing one-stop solution for various entertainment needs, including booking movie tickets, IPL tickets, dining reservations, live entertainment, and more.

Building a super brand

Despite having a large customer base with the Zomato app, Goyal said the decision to create a separate app, 'District', stems from a belief in building 'super brands' rather than 'super apps'.

Zomato intends for the new app to foster a unique brand association with entertainment and lifestyle activities, which could also enhance customer loyalty, he said.