From food to grocery to movie tickets: Zomato diversifies into India's burgeoning urban life

Zomato-Paytm deal: Food aggregator major Zomato has forayed into the entertainment business by the acquisition of One97 Communications-owned Paytm's ticketing business. This is considered as a strategic move on Zomato's part in diversifying its offerings and trying to create holistic digital ecology for its users to make it not only a food delivery giant but a comprehensive lifestyle service provider.

Zomato also announced its plans to launch its own app named ‘District’ for its “going out” business, and the company has shared a detailed plan for the interim period to manage the transition.

Strategic Rationale Behind the Acquisition

Online entertainment industry, especially the digital ticketing industry, is at a growing stage in India. The digital ticketing market in India is pegged at $3.7 billion, according to a recent report by Fact.MR. The report also mentioned that it represents an absolute dollar growth of $2.1 billion by 2033. According to the report, the Digital Ticketing Market in India is likely to grow at a CAGR of 2.8 per cent from 2018 to 2022 and is estimated to grow at a CAGR of 7.9 per cent from 2023 to 2033.

With that kind of growing market, Zomato will buy out Paytm's entertainment business and corner some of it. Ticketing is an absolute add-on for its food and grocery delivery platforms to ensure increased user engagement and stickiness. All in all, with a large user base running into over 80 million monthly active users, it just provided the audience for these new services.

The acquisition would take Zomato one step closer toward its diversification strategy. Food delivery remains at the core, while other opportunities are being actively scouted. While the acquisition of Blinkit (earlier Grofers) in 2022 had been a big step into the space of quick commerce, with its foray now into entertainment, Zomato is all set to further diversify its portfolio.

Growth opportunities

It just brings in tremendous synergies here between the current offerings of Zomato and the new entertainment services. For instance, the food delivery platform itself might be leveraged in cross-selling movie tickets or live event bookings. Say you're ordering in food on a movie night. Now you will have a prompt to book a movie ticket at a discounted price. These very cross-sells enrich the user experience and increase average order value, hence contribute positively to revenues for Zomato.

This could be an entertainment recommendation by the platform itself using data analytics and personalisation knowledge. It may, in its totality, provide personalised movie or event or live show recommendations, which are going to increase user engagements and satisfaction while analysing user preferences. This may be a sort of personalisation that can differentiate Zomato and help it gain a foothold in the entertainment market against competition.

Entry into this market is not going to be that easy. Stiff competition from established players in this space like BookMyShow would be seen. Deep relationships that BookMyShow has built up with theaters, event organisers, and production houses give it a competitive edge. Zomato would have to form similar relationships or offer enough incentives for theaters and organizers to come on board its platform.

Conclusion

Acquisition of Paytm's entertainment business will further help Zomato in denting this fast-growing market. Integrating ticketing services with existing food and grocery delivery platforms thus adds to increasing user engagement and loyalty. Huge user base would act as the ready audience for such new services—excess of 80 million monthly active users.

While food delivery remains core to the business, Zomato has been looking quite aggressively at other avenues of growth. It took a huge step into Q-commerce with the acquisition of Blinkit in 2022, and entry into entertainment now would further diversify Zomato's portfolio.