According to a recent report by Internet and Mobile Association of India (IAMAI) and IMRB International, the Indian e-commerce market is expected to grow 33% this year to Rs. 62,967 crore (~$7.5 billion). The market remains dominated by the online travel segment, which contributes 73% of revenues for the year. The remaining 23% comes from other categories, such as online retail and classifieds. Event ticket sales are thus a very small share of the Indian e-commerce landscape, but local portal Bookmyshow.com is making big news in the industry.
BookMyShow.com is the flagship portal of Bigtree Entertainment group. It was founded in 1999 when three friends, Ashish Hemrajani, Parikshit Dar, and Rajesh Balpande, came up with the idea of an online ticket aggregator system while on vacation. The trio founded Bigtree and took over the rights to retail and service Vista, a New Zealand–based ticketing software, in India. Soon they expanded into offering online movie tickets in the country and became India’s first ticketing aggregator.
But setting up the industry in India was not easy. Early laws in the country prevented sale of tickets for events outside the box office. To add to their worries, Indian ticketing solutions were rather antiquated as well. The absence of an e-ticketing software and single screens in most businesses led to them buying tickets for events in bulk and selling them through their website to the end consumer. The model was understandably non-scalable and the unpredictable nature of demand also ensured a very tumultuous formative years. To their relief, the Indian government amended the act governing event ticket sales in 18 months. Furthermore, bigger entertainment houses and investors realized the value of the offering by Bookmyshow, and things started to improve.
Today BookMyShow is a ticketing, information, and analysis solutions provider not only for movie theaters but for other entertainment events in the country as well. They have sold tickets for sporting events like the cricketing event, Indian Premier League 3, hockey World Championships, and Badminton Asia Championships in New Delhi. Their offerings extend beyond the Internet as consumers can transact through their call centers, kiosks, and mobile ticketing platform.
As of December 2012, more than 5 million registered users were booking tickets in more than 105 cities for more than 1,400 movie screens and other live events happening in the country. The site sells an average of 46 tickets per minute. comScore statistics show that the site saw total visits to the site grow 40% over the year to 7.7 million in December 2012.
BookMyShow earns revenues by charging a convenience fee on tickets sold through their portal. Last year, revenues grew 80% over the year to Rs 52.6 crore (~$6.3 million). Bookmyshow keeps a tight leash on its costs and has been profitable. It reported net profits of Rs 3.2 crore (~$0.4 million) for the previous year.
The company is largely venture funded with investment from the media and entertainment group Network 18, which owns 60% of the company. Last year, Accel Partners also invested $18 million in the venture to acquire a minority stake.
BookMyShow’s Market Expansion
BookMyShow is expanding its presence in the country and recently announced the acquisition of Chennai-based Ticketgreen.com. Ticketgreen has been focused on the southern part of India and has tie-ups with more than 100 cinemas for online ticket sales. Prior to the acquisition, BookMyShow did not have any presence in the region.
The company has also tied up with multiple theater and entertainment groups and recently announced a five-year online ticketing contract with PVR Cinemas, one of the premier movie theaters in India. PVR estimates that within five years of the contract, BookMyShow will help sell tickets worth Rs. 1,000 crore (~$120 million) through its web and mobile applications. The alliance will help PVR Cinema expand their current online sales from 20% to an estimated 25% in the next few years.
I observe many of the same dynamics in this company as in numerous other Indian Internet/e-commerce ventures: the lack of growth rate. Outside of the online travel segment, Flipkart, and a few niche plays like CaratLane (jewelry), the sector is plagued with slow growth rates.
That begs the question, what is Accel Partners doing investing $18 million in the company for a minority stake?