Online ticketing venture BookMyShow may stop selling tickets in Maharashtra unless the State Government addresses the issue created by a notice which prevents websites like BookMyShow from charging a convenience fee from their users, The Hindu reports. The notice was issued on April 4, 2013, restraining charging of extra fee for online booking of movie tickets, following which a Public Interest Litigation was also filed in the Bombay High Court.
Maharashtra is the biggest movie market in India, BookMyShow is the largest online movie ticketing venture in the country, and its dependency on Maharashatra is likely to be high. BookMyShow CEO Ashish Hemrajani has told the publication that they are taking a significant hit in the state, and “at some point, if the water goes above the neck, I will shut it down in Maharashtra.”
As much as I disagree with the notion of government or courts debarring a perfectly legitimate business model, I do think that Hemrajani’s suggestion that they would stop operating in Maharashtra is largely posturing: BookMyShow stopping ticketing in Maharashtra is akin to an OTA saying that it will not sell tickets for the Delhi-Mumbai route.
This is BookMyShow’s second run-in with a government-created issue, the first being in Andhra Pradesh, where the the government had passed an order allowing only one company (Galaxy Entertainers) to sell tickets online. Eventually, BookMyShow got a favorable verdict in Andhra Pradesh, and resumed their services.
BookMyShow reported revenues of Rs 52.62 crore for the year ended March 31, 2013 (FY13), and a profit of Rs 3.23 crore for FY13.
In an interview with MediaNama a couple of months ago, Hemrajani had said that government decisions (such as these) are either political or based on ignorance. “Can you imagine regulating the MakeMyTrip’s and Cleartrip’s? Can you imagine going to IATA and printing booklets of tickets? In Indian Airlines and Air India, you had to go and get a token number for tickets? …We pay service tax to the government. We don’t provide entertainment. It’s an optional service – you can go to the Box Office to buy a ticket. My pricing for the customer is transparent, and I’m paying the government for it. Under any stretch of the imagination, it cannot be incorrect. 8-9 years ago when I went to the government of Maharashtra, saying that I want to start this business, they issued a GO in my name, saying we should take permissions from the collectors office and the police commissioners office. We have all the permissions. And then suddenly, they turn around and say you can’t. Then the only recourse is to go to court.”
One could argue that given that online ticketing offers theaters wider reach and digitization lowers the cost selling tickets, they’re the ones that should be paying online ticketing websites, and not the consumer. In case of the travel industry, online travel agents introduced convenience fees after the airlines pushed back and reduced commissions paid to the OTA’s. In case of movie tickets, as far as I remember, they began with the model of charging a convenience fee, so consumers are accustomed to it. As a consumer, if I have to and pick up tickets straight from the box office, it is inconvenient.
Read our interview with Hemrajani: Part 1 and Part 2.
