Not just a cold play: How Zomato can make District a blockbuster

One of the two organizers went bankrupt soon after—actor Amitabh Bachchan’s ABCL, coproducer of Miss World 1996. India’s ₹8,800 crore live events business (as per consulting firm EY) is a cruel one, and most don’t survive.

Top executives in the industry today are, largely, a new set that rose in the ranks during the first surge of events in the 2000s. Today’s top events firms include companies from a diverse business mix including BookMyShow (ticketing) and Nazara Technologies’ Nodwin (gaming). Older ones, including Percept and WizCraft, have diversified into several lines of business.

Zomato, which has metamorphosed from food delivery to quick commerce through its acquisition of Blinkit, is now taking baby steps in the events business, again through purchases. It has acquired two subsidiaries from Paytm—Wasteland Entertainment, (which houses Insider for ₹783.8 crore) and Orbgen Technologies (which owns TicketNew, for ₹1,264.6 crore). The acquisitions were completed on 27 August. Both companies are now wholly owned subsidiaries of Zomato.

To turn District, its live events and dining out vertical, into a credible competitor, Zomato will need to cut through the clutter of old and new companies, businesses that are firmly entrenched in the events space. Can District become its next Blinkit?

Party bills

Zomato declined to comment. In a statement to shareholders, the company’s co-founder and chief executive officer (CEO), Deepinder Goyal, said Zomato’s top priority after acquiring Insider is the “successful transition of the customer traffic from Paytm/Insider/TicketNew apps to the District app over the next 12 months," and not selling more tickets. There is little money to be made in just the ticketing business. The latest available company filings show that India’s largest ticketing platform, BookMyShow, made a net profit margin of just 8.7% despite a hefty ₹975.51 crore in revenue from operations in 2022-23.

Zomato has also reportedly hired Kunal Khambati, BookMyShow’s former head of live events and intellectual property (IP), apart from rehiring old hands Rahul Ganjoo and Pradyot Ghate to build the District business along with Zeenah Vilcassim, former chief marketing officer of Bacardi India, who joined last year.

The real money, for Zomato, as for its rivals, is in producing live events. That can include a mix of its own IP (such as Zomaland, a food festival, and Feeding India, a multi-artist concert), running branded events for clients, and perhaps even organising ‘white label’ corporate events such as dealer conferences and trade exhibitions.

BookMyShow is already reaping the rewards. Demand for premium live events in India grew 82% last year, the company’s chief of business of live events, Owen Roncon, said in a statement to Mint.“Mirroring this increase, BookMyShow Live’s consumer cohort of premium event-goers also grew," he added.

The trouble, however, is that events and their organizers take a long time to breakeven. Percept, one of India’s oldest events firms, has been in the midst of a promoter spat and a resultant corporate insolvency process since 2018. A later generation of events firms emerged in the late 2000s, starting with the music festival NH7 Weekender in 2009 organized by the comedy and arts talent firm Only Much Louder (OML). Twelve years later, OML sold its events business and all live IPs including NH7 to Nodwin Gaming, a division of the gaming firm Nazara Technologies, for ₹73 crore. A quick look at the live events divisions of all major players in the space shows almost none of them are making good money yet, including the burgeoning Zomato Live division, now transitioning into Zomato District.

For now, Zomato owns two event IPs. It launched Zomaland in 2019 and Feeding India in 2022. But, it takes longer than that for a large, headline event to break even. “It took NH7 Weekender about five years to break even," a top events management firm executive familiar with the event’s numbers told Mint, requesting anonymity. “It was also much harder to make money in this when NH7 Weekender first started. Tickets were not sold exclusively online. Back then, 80% of the festival’s tickets were sold on the ground right before the show." NH7 Weekender, an annual music and comedy festival, started in 2010.

Besides, it is easy to lose money on international acts; top talent can charge up to $1 million to perform and their calendars are booked two-three years in advance.

In short: it takes a lot of advance planning to build a large-scale events business. And running just a couple of concerts with top international talent may not cut it.

“Having diversity in your portfolio of events is incredibly important," said Tej Brar, head of festivals for Nodwin Gaming. Brar handles Nodwin’s live events IPs including recent acquisitions NH7 Weekender (bought from OML) and Comic Con (acquired this January). “Generally speaking, white-label events are more profitable because corporate clients pay for it upfront," he added.

Comic Con is a convention for fans of comic books and ‘nerd’ pop culture. White-label events include dealer conferences, trade exhibitions, and other public or private events produced for a corporate client, where there is less pressure to sell tickets and manage a tight budget than a consumer-facing event. Old hands like Percept and Wizcraft have entire divisions dedicated to running white-label events.

While large concerts and music festivals can bring in a bulk of a firm’s annual profits, revenue year-round comes from running several smaller events. “Comedy, for example, has much deeper legs than any other genre in events in India," the top events management executive quoted above said. “There are more than 66 cities in India where comedy shows and tours have been done in the past few years. These also attract a wider audience because the comedian may perform in a regional language and the tickets are often priced at ₹199 – 599."

For Zomato District, the eventual challenge will be to build a calendar of events, both big and small, to ensure the business generates revenue year-round.

Competitive advantage?

When BookMyShow began producing live events in 2017, it was already the go-to app for entertainment tickets for a large captive user base. Zomato has bought that audience from Paytm. But both companies must still deal with the large, upfront investments that go into producing a live event. Does Zomato District have an advantage over rivals? Perhaps.

The bigger the event, the more upfront investment is needed to make it a success. Consider an international act such as a singer like Dua Lipa or a comedian like Trevor Noah. “International artists can charge anywhere between $500,000-1 million," said Roshan Abbas, founder of events firm Encompass and culture firm Kommune. “A venue like Jio Garden (in Mumbai) will cost another ₹50-55 lakh for two days. And the cost of production can add another ₹2 crore."

Sales of tickets generally do not cover the cost of a live event in India, according to industry experts. This is because even premium events in India tend to be priced much lower than their international counterparts. Consider NH7 Weekender or Sunburn, where tickets start at ₹1,299 ($15) and go up to not more than ₹5,000- ₹6,000 ($60-70). Next year’s Lollapalooza India is pricier, with tickets ranging from ₹7,000 to ($83) to ₹48,000 ($570) for Platinum passes. In contrast, general access passes at music festivals such as Coachella and Tomorrowland can cost as much as $300-$500 apiece.

“This is why the live events industry has this dependence on corporate sponsorship," Nodwin’s Brar explained. “All these major events have several presenting partners and other co-sponsors. This sponsorship is what makes up the deficit on ticketing."

Depending on the size of the event, brand sponsors can even cover the entire cost of producing one. Sales of tickets, merchandise, food and beverage (F&B) can often accrue directly to the bottomline. In particular, alcohol brands are a great source of revenue for events in India in two ways—one, sales of alcohol at a venue tend to be highly profitable and two, alcohol brands are among the biggest advertisers at live events.

F&B sales can add up to 25% of an event’s sales, but without alcohol, the margins can stay slim, according to Nodwin’s Brar. “Comic Con is a family-friendly event so there is significant earnings coming in from F&B but does not serve alcohol," he said. “So the F&B earnings from it are not at the same scale as from NH7 Weekender where alcohol brands are significant tenants."

Yet, alcohol companies, heavily restricted by the country’s advertising rules, seek out events such as music festivals to market to the young. Cuban alcohol firm Bacardi and alcohol major AB InBev’s Budweiser have been associated with India’s biggest music and culture events for at least a decade, if not longer. Several top executives in the live events space in India have come from marketing roles in alcohol brands such as Bacardi and Budweiser, frequent sponsors of music, comedy, and culture shows focused on urban youth in the country.

BookMyShow understands the F&B opportunity too. “The food and beverage scene is really shaping up to be a game-changer for live events, and a perfect example of this is ‘The Lolla Food Park’ at Lollapalooza India," Owen Roncon told Mint. “Our focus remains on elevating and prioritising the fan experience by enhancing peripheral offerings including on-ground engagements, F&B and hospitality, parking and seamless ingress management."

Alcohol companies, heavily restricted by India’s advertising rules, seek out events such as music festivals to market to the young. Bacardi and AB InBev have been associated with music and culture events for at least a decade.

This also explains why Zomato is ditching Zomato Live to build the District app and combine dining out with live events. Zomato’s core business is restaurants and dining out, and those relationships will come in handy when coming up with new ideas for events and revenue streams in the District business. It also helps solve the biggest headache for the organizers of any live event big or small–securing funds before the show goes live.

Where’s the party?

Zomato’s biggest problem, however, is the same one its rivals are also facing—infrastructure. Indian consumers may be ready to go out, but there aren’t nearly enough well-equipped venues for large events that can host 10,000 people or more in one go. In 1996, India hosted Miss World for the first time in Bengaluru’s M. Chinnaswamy cricket grounds. 2025’s Coldplay concert in Navi Mumbai will be held at the DY Patil Cricket Stadium. Dua Lipa will perform at MMRDA Grounds in Mumbai, where Michael Jackson did in 1996, while singer Diljit Dosanjh will perform in another sports stadium in Delhi.

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In a recent interview with Moneycontrol, Zomato’s Goyal said the company may invest in building stadia and other infrastructure with a partner, suggesting an arrangement such as rental-free days in exchange for the capital expenditure.

But, the real gap in the supply of venues lies not in large venues for big-bang events but midsize places where highly curated and profitable shows can be held. “While there are a few venues which allow for 2,000-6,000 people capacity in India, there is a significant lack of plug and play venue options," Nodwin’s Brar said. “What this means is that while it can hold the people, they don’t have light, sound inventory solutions or a stage inbuilt. It needs to be built from scratch."

This may be the biggest reason touring artists with a niche but loyal fan following give India a miss while touring the region. Brar argues that this forces event organizers to scale up and run music festivals with multi-artist lineups to eke out a profit.

Money Spinner?

Quick commerce business Blinkit has been a (surprisingly) roaring success for Zomato, with most analysts calculating that it now accounts for more of the stock’s value than the mainstay food delivery business, let alone the original dine-out vertical.

Can ‘going out’ and the District app give Zomato’s investors such outsize returns? Perhaps not.

Analysts tracking the stock say it makes little sense for the firm to stray far from its core proposition: being an aggregator. “I don’t think Zomato will get into full-fledged production and stage management," said Abhishek Pathak, a research analyst with broking firm Motilal Oswal. “This (District business) will probably not be a Blinkit but, at best, may add 10-12 basis points to their SOTP (sum of the parts, a valuation measure for companies with various business segments). Intuitively, a capex-heavy business like this may not be a spinner. But then, people have been wrong about Deepinder Goyal’s bets (quick commerce) in the past too," he added.

In a note last week, brokerage firm Kotak Institutional Equities estimated Zomato’s September 2024 quarter was driven by significant growth in Blinkit as it sells pricier goods including electronics to increase its average order value. For now, at least, events may be merely a long-term play for the company to increase its share in its existing customer’s wallet.

Zomato’s shares closed at ₹276.70 on 11 October, more than double its price a year ago.

Much has changed since 1996. Tickets are sold largely online although ‘90s-style black marketing is alive and well (BookMyShow recently cautioned fans about potential Coldplay ticket scams). Younger Indians have more disposable income and want to splurge on an experience of a lifetime—music, food, drinks and memories. Some things remain the same, though. We are still hosting concerts in cricket grounds and events still need sponsors to break even. Zomato District’s real success will lie in shifting the economics of the events industry even more—making events truly a ‘going out’ business.