How significant is the online ticketing business for Paytm?

The answer: Very.

But, first things first. Paytm isn’t coughing up $30 million to pick up a majority stake in Insider.in. Nope. That number, reported in the pink paper is way overstated. Paytm will be paying about Rs 35 crore ($5.38 million) to pick up a majority stake. Some part of this will be primary investment in Insider. Some part secondary, for OML Entertainment, the parent of Insider. The deal is still in the works. What is Insider.in? 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 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.

AUTHOR

Ashish K. Mishra

Ashish edits and writes stories at The Ken. Across subjects. In his last assignment, he was a Deputy Editor at Mint, a financial daily published by HT Media. At the paper, he wrote long, deeply reported feature stories. His earlier assignments: Forbes India magazine and The Economic Times. Born in Kolkata. Studied in New Delhi – B.Com from Shri Ram College of Commerce, Delhi University. Works out of anywhere, where there is a good story to be told.

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