Going out with Zomato's District (in theory)

Introductory note
This post focuses on Zomato’s upcoming live events app: District. This app exists in theory as on October 16, 2024. I propose ideas for monetisation, triggers for lower margins and mention standard ways of making money. I wrap it up with my ideas (pipe dreams) of what District should be.
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Table of Contents

1. Defining Going out

2. Key industry players

3. Margin Boosters for District

4. Margin Throttlers for District

5. Margin Drivers for District

6. Conclusion

Defining Going out

We can formalise the Going out market as Out-of-home experiences. These experiences include dining at restaurants and attending movies/ concerts/ plays/ slam poetry/ stand-up comedy/ festivals/ live sports.

We can also extend workshops run by chefs/ bakers, on-ground historical tours, social mixers, shopping and travel (among other solo/ group events) to this ever expanding list.

This is a multi-sided market with customers (demand) and merchants (supply) brought together by the respective aggregator platform (Zomato/ Swiggy/ BookMyShow). Unlike food delivery and quick commerce business lines, this is largely discretionary and average order values can vary widely depending on the event type. The quality of events is a key variable and a stockout cannot be easily replenished (if at all) because of venue constraints.

With India’s growing economy, more consumers will be able and willing to spend on these discretionary events. People will continue to buy physical products and services, and will also want to participate in Out-of-home experiences.

Key industry players

a) Zomato: Zomato has enabled dining and live events (concerts/ stand-up comedy/ heritage walks/ open air cinemas/ themed festivals et al) through its Zomato app. It has previously forayed into live event management with its ongoing production of Zomaland and Feeding India (food and entertainment festivals run across cities).

It announced in August 2024 that it would launch a going-out app called District. This app would consolidate its dining and live events offerings, and cater to newer use cases including movie ticketing/ live sports/ shopping/ staycations.

The company has publicly stated its intent to build District as its third large consumer facing business in addition to food delivery app Zomato and quick commerce app Blinkit

It has been 2.5 months since its announcement and while it cannot be categorised under vapourware yet, it is unusual to not have a live app. The company has been busy behind the scenes with hiring key leaders for its upcoming big bet. The biggest proclamation of its intent came with its acquisition of Paytm Insider for ₹2,048 crore in August 2024 that made Zomato the #2 player

b) BookMyShow: This ticket booking portal was founded in 2007 and allows customers to book tickets for movies/ stand-up comedy/ live sports/ plays/ concerts/ festivals et al through its website and mobile app. 

It has been the #1 player in the ticketing and live events space in India, and was recently trailed by Paytm Insider (#2 player) and Zomato Live (#3 player) in this industry. The company last raised $100 million in 2018 at a post-money valuation of $850 million.

c) Swiggy: Swiggy has restricted itself to dining as its key going out category. It acquired Dineout in May 2022 and has built its restaurant reservation business in its superapp with a separate dineout tab. You can read more here about Swiggy and its IPO plans.

It was reported in October 2024 that Swiggy was experimenting with Rare Club, a high-priced concierge membership with a ₹50,000 yearly membership fee. In its pilot launch phase, India-Australia cricket match tickets and Coldplay concert tickets were up on offer. It will be fascinating to observe its evolution considering the high entry barrier and focus on catering to fewer users.

Perhaps, this evolves as a club membership with lower priced tiers unlocked over time to select user cohorts. This could help control the quality of experiences ahead of the membership being eventually served to a larger user cohort.

Margin Boosters for District

a) The Social Network: Unlike food ordering, events are typically a 1+ person activity. People want to attend live events and dine with their partners, friends and family. District can enable existing social circles to meet and interact over events. This format can also introduce people to other like minded individuals and groups.

In the backdrop of a global dating app slowdown, it is possible to deploy matchmaking as a feature. It will need more thought but with multi-year order history across Blinkit and Zomato, it would be easier to verify people for such offerings- matchmaking/ new friend circles.

b) Secondary Sales Fever: Everyone hates ticket scalpers. It will continue to happen but the District app can leverage secondary ticket sales in its favour by controlling the experience. It can layer on a 5-10% support fee to enable people to resell their tickets and cap the maximum resale price per ticket. 

Zomato announced a similar feature: Book Now, Sell Anytime in August 2024. It should earn a fee on enabling this resale but in its present avatar it gives back all the proceeds to the ticket reseller.

c) Credit on Tap: Concert tickets have been rising with premium events and as existing artists gain global popularity (Diljit who?!). These are discretionary expenses and District can tie up with leading NBFCs/ banks to enable small-ticket personal loans.

For creditworthy users, this can be a valuable proposition, and BNPL providers like Simpl can also step up to enable such credit outlay.

d) Differentiated DSA: Zomato ran a unique campaign in which users could get up to ₹500 off on Diljit Dosanjh concert tickets with an HDFC Pixel credit card. It was an easy digital application process and this would have secured creditable users for the card issuer.

Previously, Kotak Mahindra bank offered Trevor Noah tickets with a special 48 hour presale reserved for Kotak White credit card holders.

e) Event x Vacation: The Coldplay Mumbai concert bookings in September 2024 left many concertgoers disappointed. Subsequently, many social media posts referenced how it would be easier to book Coldplay Abu Dhabi tickets and couple it with a vacation.

I believe that event tourism can be transformative if District fully owns the experience. This will start with higher priced experiences and with time, it can be scaled to a larger user cohort. It may be harder to run for single artist shows, but 2-3 day festivals including Lollapalooza and Magnetic Fields are viable.

f) Venue to Artist: Similar to onboarding restaurants for food delivery (supply side), the District sales team can onboard convention centres, clubs and restaurants for hosting events. Instead of such venues holding one-off events to attract customers, the District team can build out an event calendar for them and split the revenue. 

A hands-on approach can standardise event quality, establish safety procedures at venues and District’s seal of approval can drive more business even in non-event hours. 

As District gets better at experience curation, it can explore building a talent agency to sign upcoming artists. Locking in venues + artists enhances District’s right to win the market.

g) Subscription Economy: Each event type i.e. live sports/ concerts/ plays/ stand-up comedy draws in regulars and fresh attendees. The regulars plan their weeks/ months around these event calendars.

District can support them with yearly subscriptions (season tickets) for their preferred events. Season tickets are extensively used in football (English Premier League) and basketball (National Basketball Association), among other sports.

A subscription plan can offer exclusive pre-sales, guaranteed tickets for defined artist tiers, lower platform fee and F&B discounts. The real unlock will be figuring out how to scale this in a way that rewards super users and has enough to attract fresh attendees-- perhaps a tiered approach.

Margin Throttlers for District

a) Toeing the Line: As District grows, it has to be mindful of future government regulation in the live events space.

The US government sued Live Nation in May 2024 for alleged anti-competitive conduct. In September 2024, closer to home, the Mumbai police summoned BookMyShow executives for an inquiry into alleged black marketeering of Coldplay tickets. 

b) Cost of Production: The cost of production per live event cannot be scaled across multiple events. Each event and its corresponding venue has different audience capacities, performer requirements and varied pricing tiers.

Additionally, the support staff and security required for event setup and facilitation adds to the cost structure. Zomato/ Blinkit have excelled at moving food and groceries from point A to point B. It will be a challenge for District to enable a quality experience across venues across seating tiers while keeping costs in control.

c) All Hits, no Misses: Events are a hits business. With event experiences, the quality is subject to the artist performance, venue setup and individual customer experience. In food delivery and QC, everyone is treated as a prime/ VIP customer. The differential pricing for standing tickets/ seated tickets/ lounge tickets is a feature and indicative of customer standing.

This unequal treatment can be salvaged by superlative performances. This is hard to maintain event after event, and can result in disappointing experiences for paying customers.

d) Event Mishaps: Events, big and small, have gone sideways over the years. In September 2023, Trevor Noah’s shows in Bengaluru, India were cancelled last minute due to technical issues.

In November 2021, 10 people died at the Astroworld festival due to a crowd surge and other reasons. These unfortunate events make safety a key concern for event-goers. This will mean that District over-indexes on crowd safety over all else as it begins operations.

Events cannot be blitz-scaled unlike food delivery and quick commerce by just getting more people on the ground. District has to be mindful of consequences for attendees, organisers, and artists.

Margin Drivers for District

These are standard channels for District to monetise its events business. Specifically,

a) Advertising Income:

i) DSA for financial products: Cross-sell high margin financial products including credit cards and personal loans. Event specific tie-ups like the HDFC Pixel card campaign with Diljit Dosanjh concert tickets are even more valuable.

ii) Sponsored event listings: Surface promoted events on top of the page. This helps build brand IP if these are recurring events and boosts ticket sales.

iii) Artist pages: In line with my proposed social network, it would be compelling to have artist pages on the District app. Artists could acquire organic followings and promote their events. District can offer paid boosts to drive follower signups and enable artists to better price events.

iv) Event sponsors: District can bring in upfront sponsorships for events to drive per event profitability. As an event-focused app, brand takeovers of the app home page can help boost brand credibility without having to pick and choose between events.

b) Insights as a Service: With information collected about user behaviours and artist preferences, District could offer anonymised data sets to help artists and organisers build better events.

For example, a preference for indoor vs outdoor events, short events vs longer events, solo artist vs multi-artist events et al is revealing and can drive data-driven event organisation. Brands can also target specific users for their offerings considering user preference for certain event types or artists.

c) F&B Partnerships: Zomato understands food and beverage (F&B) margins extremely well. District can leverage Zomato’s existing partnerships with F&B outlets and secure stronger margins with restaurant pop-ups at events.

d) Merchandise to Market: District should leverage Zomato’s QC app Blinkit to drive merchandise sales pre-event. Customers should not have to line up in long queues for merchandise and should have options to order in advance and receive apparel at home or at the venue entrance.

Along with these sales techniques, standard merchandise sales at events can drive margins.

e) Ticketing Fee: The fee (order/ processing/ handling/ platform) can be sizable for ticket sales. District should be upfront in charging these fees and avoid dark patterns.

Conclusion

District should launch with ambition. With its Paytm Insider acquisition, Zomato (#2 player) walks into a fistfight with BookMyShow (#1 player) in movie ticketing and live events. It would be a shame if the outcome is just a nicer movie experience and a safer concert/ play/ cricket match.

It would be a definite improvement on present offerings. However, District has an opportunity and deep pockets (₹12,000+ crore in Zomato’s treasure chest) to do better. Zomato and Blinkit’s brand positioning is talked about on social media as witty and relatable. However, not enough is talked about how these brands inspire loyalty.

Brand value has real value. Cute push notifications, smart word-play on billboards and delivering a gaming console in 10 minutes has recall value. This means Blinkit can charge consumers on 90%+ QC orders unlike Zepto and Swiggy. The Zomato CEO moonlights as a delivery rider and his act and takeaways will go viral on social media. The goodwill created across these brands will initially benefit District.

District has a chance to build a community of casual and committed event-goers. It can simplify life for people who book events for friends and family. Beyond existing social circles, it can tease together group outings for people with artist/ event preferences and uninterested friends/ family.

This community has demand (consumers) and there is merit in building supply (artists). Most artists earn insufficient sums from streaming but can leverage followers for merchandise and ticket sales. “It’s 2024-- who needs another social network?”. However, this network has art to offer, intent to pay and income to support this intent. It also comes with an in-built user base accustomed to booking dining reservations.

Beyond demand and supply sides, the lifeblood of this app will be events. Every option to leave home or office is a saleable event. District has an opportunity to soft launch a subscription for power event-goers. Let them act as influencers and nudge casual event-goers into District-run events, and eventually their own subscriptions.

At home and office, Zomato delivers your food and Blinkit your groceries/ apparel/ everything else. These apps save you hours every month. District can enable memorable experiences in these hours spent outside of home and office.

Arjun’s picks

• Fascinating book from Andrew Wilkinson talking about his entrepreneurial career. In the very first chapter, he is traveling to meet Charlie Munger

• Legendary read from Charlie Munger that distills business and life lessons through speeches he made throughout his career.

• Coolest video on the internet this week. Chopsticks. SpaceX. Elon Musk.

• Doug Leone on the Invest Like The Best podcast. Old favourite, heard this 3x.

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