Formula 1’s TV audience has declined steadily over the past decade, falling by about one third since 2008. However, after reporting a small increase in 2017, Liberty Media has big plans for F1 viewing options this year as it launches a new platform: F1 TV.
Since completing its $8 billion takeover of F1 in January 2017, Liberty Media has been working hard to overhaul the sport
Since completing its $8 billion takeover of F1 in January 2017, Liberty Media has been working hard to overhaul the sport and find areas for improvement. The introduction of an ‘over-the-top’ streaming service was high on its agenda, with plans for F1 TV being announced last month ahead of the new season.
A first for F1
F1 has never before offered an in-house streaming service, instead leaving its broadcasting partners across the world to arrange online viewing. However, Liberty wanted to serve fans with its own subscription service, putting plans at the heart of revised broadcast agreements in certain territories. In the United States, the NBC Sports Group chose not to sign a new F1 contract because it did not want to compete with the new platform, with the result that rival ESPN gained the rights on a multi-year deal at a reduced fee.
The full plans for F1 TV were confirmed by F1’s head of digital and new business, Frank Arthofer, at a press conference at the end of February in Barcelona. A two-tier service will be on offer: F1 TV Pro, which allows fans to stream every session of the grand prix season live via 24 different camera feeds, including on-board footage from every single driver; and F1 Access, a cheaper, more limited service that offers radio commentary, race highlights, live timing and data, but no live TV broadcasts.
F1 TV Pro will be available only in regions where broadcast agreements allow it, such as the United States, France and Germany. It will not be available in the UK, chiefly due to the existing contract with Sky Sports that runs until 2025.
“In the markets where we’ve carved these rights out, we’ve done so with full transparency in the context of our contract agreements, so it won’t be a surprise to any of our partners,” Arthofer said, announcing the arrival of a rival service to broadcasters that have paid millions for the rights to show Formula 1.
“This service gives fans a chance to engage more deeply with the sport and that’s a win for all of the stakeholders around it: sponsors, broadcast partners and the teams of Formula 1 itself.”
Competitive landscape
Asked if F1 TV would compete with the traditional subscription model for broadcasters, Arthofer stressed it was “very much not the case”, rather that it would complement traditional viewing options. For instance, a fan of a particular driver would be able to watch the race live on their television, and use F1 TV to view the same race purely from on-board that driver’s car.
It’s about delivering the really hardcore fans a better service than is currently available on the market
“I think there’s a role for both products,” Arthofer added. “This is what I would call the sort of very super-fan product. It’s about delivering the really hardcore fans a better service than is currently available on the market.”
The high cost of viewing F1 in Britain has made fans particularly interested in F1 TV, albeit that there are no plans to make it available to the UK market. Arthofer stressed F1 would work on geosecurity measures to prevent access to F1 TV via a virtual private network because it was “very important” to protect its broadcasting partners. However, this did not stop Sky slashing the price of access to its dedicated F1 channel from more than £300 to £150 for nine months, just one day after the announcement was made.
The new normal in sports broadcasting
F1’s shift to an over-the-top streaming service follows in the footsteps of other sports leagues and franchises. In the US, the National Basketball Association and the National Football League have offered successful packages to fans online in tandem with broadcast partners, making the two-year deal with ESPN a litmus test for how the two services will go hand in hand for F1.
“While this is quite new in Formula 1, this is not new to the world of sport,” Arthofer said. “I think there are a number of existing test cases out there that serve as a relevant example for us. But I think the US is a good market for us to explore and learn how successful we’ll be there.
“I think the world of online streaming is evolving so quickly that building a great product that’s very stable is a win. This is not lip service, it’s truly about delivering a great service for the fans this year.”
After so many years without changing its broadcast model, the challenge for F1 will be not only to make the new OTT service work, but also to reverse the decline in viewership. Offering directly to fans without forcing them to commit to a subscription service should prove popular, but with broadcast fees being a key source of F1 revenue, a fine balance needs to be struck.
We have around 500 million F1 fans in the world, about 5 per cent of the world’s population
While Arthofer was unwilling to set a fixed viewership target, the figures discussed were impressive.
“By our estimates we have around 500 million F1 fans in the world, about 5 per cent of the world’s population, which is quite a number,” he said. “If even, conservatively, 1 per cent of that customer base is a super-avid hardcore fan, that’s a five million addressable audience to sell that product to who would potentially be willing to pay the incremental fee to access what really is the best way to watch F1 in the market.”
If five million fans signed up to F1 Pro, priced at $100 per year, that would bring in additional revenue of $500 million – roughly equivalent to the value of F1’s current broadcast agreements combined. The potential is massive, and definitely attractive to teams, which would be in line for increased payouts were revenues to rise.
F1 TV launched on March 22 via desktop, three days before the start of the season in Australia.
