Netflix campaign to survive He is usually credited with spurring the boom in Formula 1’s popularity. But it’s the racing series’ indoor broadcast experience that’s quietly building traction and increasing revenue for the sport.
Five years after the launch of F1 TV, the live sports streaming product is boosting media rights revenues by attracting millions of subscribers eager to keep up with the action all season long.
F1 TV has increased its global reach by expanding into 186 markets. But the Pro version, which carries live racing streams, is only available on the 87.
It marks a shift from traditional broadcasting models, and forms a key component of the sport’s growth strategy under US owners Liberty Media, which took control of F1 in an $8 billion deal in 2017.
Major markets such as Brazil, Mexico and the United States are among the countries where fans can watch the races live with F1 TV Pro. It’s also available in the Netherlands, home of F1 champion Max Verstappen, who follows his orange-clad fans at every turn. “It has given us, for the first time, a direct relationship with a fan,” says Ian Holmes, F1’s director of media rights. “I had a concern about how it juxtaposed with third-party rights deals.”
Originally, interest came primarily from “ardent fans” of F1, who wanted to see more content in addition to the traditional broadcast. But F1 thinking has evolved as new fans flock to the sport. “He’s not just an avid fan,” says Holmes. “The younger fan is the demographic that is the most engaged and most comfortable with data.”
Holmes says F1 must be flexible in its approach. In some markets, such as Brazil and Mexico, F1 partners with carriers and broadcasters, making them primary distributors of F1 TV, as well as Apple and Android, where F1 sells the app subscription. In some cases, F1 and traditional companies or networks also share the proceeds from the distribution of F1 TV Pro.
“We’re also looking at how we can better distribute F1 TV rather than just going 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 the business if someone wants to give you money and you can’t take it from them.
“In some cases, it didn’t make commercial sense to force it into the market if it was going to break up or overly break up a third-party licensing deal.”
Accounts for Formula One Digital Media, the entity that hosts F1 TV, revealed that the service generated more than $47m in revenue in 2021. This was an increase of almost 150 per cent from the $19m figure in 2020, mostly driven by subscriptions to a product Pro.
In 2021, total F1 media rights revenue is $860 million. Last year, that rose to $936 million — just over 40 percent of the sport’s total revenue of more than $2.6 billion. It was about $670 million in 2020, when the sports season was postponed due to the pandemic.
Formula One Digital Media has yet to release its calculations for 2022. However, Liberty Media said in its 2022 annual report that F1 TV was one of the reasons for the increase in media rights revenue that year. F1 TV Pro’s strongest markets include the US, Mexico, the Netherlands, Scandinavia and the Nordic countries, Holmes says, along with deals with traditional broadcasters.
Analysts see more growth. In March, a research note by JPMorgan’s David Karnofsky said F1 TV “was the biggest driver of [media rights] Revenue growth in 2022 than we initially projected remains a potential upside for our 2023 estimates.”
However, traditional broadcast deals also increase media rights revenue. Karnofsky expected new contracts with the likes of ESPN in the US and Foxtel in Australia to help boost media rights revenues this year by 13 percent.
Mike Kerr, managing director Asia Pacific at beIN Sports, says he is not worried about the rise of F1 TV Pro because traditional broadcasters can aggregate a variety of sports and combine it with entertainment and news channels.
F1 TV Pro is not available in beIN Sport’s markets – which include Hong Kong, Singapore, Malaysia, the Philippines and Thailand – as beIN has an exclusive deal to show the races live on its ‘over the-top’ streaming service, so fans can watch the races. We expect to “watch all our content anytime, anywhere on any screen”.
“I don’t think there’s any sport that’s big enough to go directly to the size of the audience we can,” Kerr said, “and we can only address the audience because we have a different sport on our channels.” The first three races of this year were the most watched content on our networks except UEFA Champions League Final Liverpool – Real Madrid in 2021.
The UK, Italy and Germany are also among the countries where F1 TV Pro is not available, with Sky paying for exclusive rights to show live sessions and the races. The broadcaster has a dedicated F1 channel and is a major partner of F1.
But, ahead of this season, the F1 TV product was launched in India – giving F1 a presence in a market where it hadn’t signed a traditional broadcasting deal because, as Holmes explains, “The shows that were put in, we didn’t think represented a fair valuation… People had spent all their money.” on cricket.”
The Middle East may be next in line, as sports negotiate with broadcasters, says Holmes.
F1 is constantly trying to improve its media technology as well. It is no longer limited to smartphones – users can now ‘cast’ the broadcast to their TV screens. The next step might be to allow fans to interact on screen with friends who are watching at the same time online, Holmes says. F1 is also “working hard” to get the Pro into the circuits without a 20-30 second time delay. “It’s a constant evolution,” he says.