Netflix’s Drive to Survive is often credited with catalysing the increase in Formula One’s recognition. But it’s the racing sequence’ in-house streaming experiment that’s quietly constructing traction and rising revenues for the game.
Five years because the launch of F1 TV, the game’s direct-to-consumer broadcast product is boosting its media rights revenues by attracting hundreds of thousands of subscribers keen to maintain up with occasions all through the season.
F1 TV has elevated its world attain by increasing into 186 markets. But the Pro model, which carries stay race streams, is on the market in simply 87.
It represents a shift from conventional broadcasting fashions, forming a key element of the game’s development technique underneath US homeowners Liberty Media, which took management of F1 in an $8bn deal in 2017.
Major markets similar to Brazil, Mexico and the US are amongst international locations the place followers can watch races stay with F1 TV Pro. It’s additionally obtainable within the Netherlands, house of F1 champion Max Verstappen, whose orange-clad followers observe his each flip. “It gave us, for the first time, a direct relationship with the fan,” says Ian Holmes, director of media rights at F1. “I had a concern as to how it would sit alongside third-party rights deals.”
Originally, the curiosity primarily got here from F1’s “more avid fans”, who wished to look at extra content material along with the normal broadcast. But F1’s pondering has advanced as new audiences have flocked to the game. “It’s not just the avid fan,” says Holmes. “The younger fan is the most data-comfortable, interactive demographic out there.”
Holmes says F1 have to be versatile in its strategy. In some markets, similar to Brazil and Mexico, F1 companions with telecoms firms and broadcasters, making them important distributors of F1 TV, along with Apple and Android, the place F1 sells the app subscription. In some circumstances, F1 and conventional broadcasters or networks additionally share revenues from distributing F1 TV Pro.
“We’re also looking at how to better distribute F1 TV rather than just go through the Apple Store or the Android equivalent,” says Holmes. “You start looking at direct billing relationships. Sometimes it’s more difficult — it’s probably the most frustrating thing in business if someone wants to give you money and you can’t take it from them.
“In some cases, it didn’t make business sense to force it into a market if it was going to cannibalise or overly cannibalise a third party licensing deal”.
Accounts for Formula One Digital Media, the entity that homes F1 TV, reveal that the service made greater than $47mn in revenues in 2021. That was a rise of almost 150 per cent on the $19mn determine in 2020, largely pushed by subscriptions to the Pro product.
In 2021, F1’s complete media rights income totalled $860mn. Last 12 months, that elevated to $936mn — simply over 40 per cent of the game’s greater than $2.6bn income complete. It stood at roughly $670mn in 2020, when the game’s season was postponed as a result of pandemic.
Formula One Digital Media is but to publish its accounts for 2022. However, Liberty Media mentioned in its annual report for 2022 that F1 TV was one of many causes for elevated media rights revenues that 12 months. F1 TV Pro’s strongest markets embrace the US, Mexico, Netherlands, Scandinavia and the Nordics, Holmes says, sitting alongside offers with conventional broadcasters.
Analysts see additional development. In March, a analysis word by JPMorgan’s David Karnovsky mentioned F1 TV “was a bigger driver of [media rights] revenue growth in 2022 than we initially appreciated, and remains a point of potential upside to our estimates for 2023”.
However, conventional broadcast offers are additionally driving media rights revenues up. Karnovsky forecast that new contracts with the likes of ESPN within the US and Foxtel in Australia would assist enhance media rights revenues this 12 months by 13 per cent.
Mike Kerr, managing director for Asia Pacific at beIN Sports, says he’s not fearful in regards to the rise of F1 TV Pro as a result of conventional broadcasters can combination quite a lot of sports activities and bundle them with leisure and information channels.
F1 TV Pro shouldn’t be obtainable in beIN Sport’s markets — which embrace Hong Kong, Singapore, Malaysia, the Philippines and Thailand — as beIN has an unique deal to point out races stay on its ‘over-the-top’ streaming service, so followers can anticipate to “watch all of our content at any time, in any place on any screen”.
“I don’t think there is any sport that is big enough to to go direct to the size of audience that we can,”, and we will solely tackle the viewers as a result of we’ve obtained totally different sport on our personal channels,” says Kerr. “The first three races of this year have been the most watched content on our networks except for the Liverpool-Real Madrid Champions League final in 2021”.
The UK, Italy and Germany are additionally among the many international locations the place F1 TV Pro shouldn’t be obtainable, as Sky pays for unique rights to display stay classes and racing. The broadcaster has a devoted F1 channel and is a key associate to F1.
But, forward of this season, the F1 TV product has launched in India — giving F1 a presence in a market the place it has not signed a conventional broadcast deal as a result of, as Holmes explains, “the offers that were made, we didn’t think represented a fair valuation . . . people spent all their money on cricket”.
Next in line is perhaps the Middle East, the place the game is negotiating with broadcasters, says Holmes.
F1 has been always attempting to enhance its media know-how, as nicely. It’s now not confined to smartphones — customers can now “cast” the stream to their tv screens. The subsequent step could possibly be to permit followers to have interaction onscreen with pals watching on the similar time on-line, says Holmes. F1 can also be “working hard” to make the Pro service obtainable at circuits and not using a 20-30 second time delay. “It’s a continual evolution,” he says.