Paytm acquires But why?


How significant is the online ticketing business for Paytm?

The answer: Very.

An online ticket booking system to make life easy

Some parts of this will be the primary investment in Insider. Some part secondary, for OML Entertainment, the parent of Insider. The deal is still in the works. What is It is an online ticket booking platform for events. It is a distant number two compared to BookMyShow, the market leader in online ticketing for both movies and events.

While Rs 35 crore is good money for Insider, let that not distract you. And sure, we’ll get to Insider in a while. But first, let’s address the elephant in the room. What has got Paytm, last valued at $7 billion, so interested in the online ticketing business?

It will be fair to say that the company has been warming up to this business for about a year now. It started in March 2016, similar to how Paytm barges into any business; throw money at a problem. Flat discounts, 100% cashback, 50% cashback, Rs 100 off, 1+1 offers. Surely, by now you must be familiar with the aggressive customer acquisition routine of most online players. So, Paytm did that.

Got some distance. Burnt quite some money. (Hey, each free ticket or discount you got, the cost of that has come from Paytm’s pocket. Movie theatres don’t discount) And, just a year into it, Paytm is now pouring more money through Insider.

The company, of course, has an answer to what it is doing. It is a mouthful of scale, growth and corporate mumbo jumbo thrown in, which is best stated the way it is. In an emailed reply to a set of questions, a Paytm spokesperson said: “Vast majority of Indians haven’t bought their movie tickets online.

Given Paytm’s massive footprint, we see this as a big opportunity to bring more and more users and theatres online.” She further added: “Paytm movies has emerged as the country’s fastest-growing online movie ticketing platform within a year of launch. Today, we facilitate bookings across 550 Indian cities and we are now regularly ticketing more than 20% of the total box office for all major releases.”

Simply put, Paytm is saying that online movie ticketing is an underserved market and Paytm is going after it. What the company isn’t saying is, why exactly?

Asses on seats

To understand this, it is important for us to understand the fundamentals of the online ticketing business. Let’s take a moment to cover that. The numbers below have been culled from a FICCI-KPMG study, research reports and conversations with industry experts.

By all estimates, the total box office collection in India is around $2 billion.

On the ground, the movie theatre business has been shrinking over the years. Industry estimates suggest that just in the last five years, the number of theatres in the country has dwindled from about 12,000 to about 9500. About 2300 multiplex screens and around 7200 single screens. While single-screen theatres have been shutting shop, multiplexes like PVR Cinemas and INOX are adding more screens.

Two billion: The total tickets sold, online and offline.

Needless to say, a significant percentage of them are sold offline. Most industry players like to suggest that online accounts for anywhere between 10-15%. BookMyShow said that it sold about 100 million tickets in 2016. For the same period, Paytm claimed that it sold 25 million tickets.

Let’s account for smaller, regional players and peg that number to about 25 million or thereabouts. If that be the case then the total online penetration is about 150 million or under 10%. Of course, both BookMyShow and Paytm says that the addressable market is about 500 million tickets per annum. Both players also say that in 2017, they will double the number of tickets they sold in 2016.



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