Reflecting on Sky’s F1 2019 announcement

It has been nearly a week since we found out that Sky Sports would be broadcasting Formula 1 exclusively in the United Kingdom from the 2019 season.

The news itself is not a surprise. Anyone who has been tracking the rights of sporting events in the UK will know that they are rising at a pace that free to air networks cannot cater for. The value, believed to be around one billion over six years, is something that is out of the BBC’s, ITV’s and Channel 4’s price range. It is unfeasible for them to bid with those numbers. This was always going to happen, but it was the timing that caught everyone out.

This contract will not make teams at the back of the field rich overnight. As I illustrated last week, if every single penny of the Sky deal went back to each of the eleven teams, then the lower end of the field stands to gain around £3 million in prize money when comparing 2019 with 2018. However, as was pointed out in the comments section and on various other fora, the likes of CVC will take their chunk out, meaning that teams are not going to gain as much as the illustration suggested.

Sky’s Formula 1 television overnight viewing figures have stagnated since 2012. The broadcaster averaged 711,000 viewers across their race day programming in 2012, compared with 639,000 viewers in 2015. Audiences have not moved towards Sky since they started broadcasting Formula 1. Viewing figures for the likes of Sky Go and Now TV are not released publicly, however this is unlikely to exceed 200,000 viewers per race for Formula 1. We can see this by looking at the quotation below.

In their press release outlining their achievements last year, Sky said in relation to Formula 1:

Online video views surpassed 12 million, and on-demand downloads were over 700,000.

Bear in mind that these two numbers are cumulative across the entire year. Divide both numbers by 20 race weekends. Per race weekend, online video views amount to around 632,000, and on-demand downloads around 37,000. Assuming there are 15 videos per race weekend, then each video on the Sky Sports F1 website averages 42,000 views. So, whilst the total looks great, the devil is in the detail and shows why television for Formula 1 is still king.

Online is growing extremely fast, Sky tout an overall total increase (i.e. everything) of 175 percent between 2014 and 2015, so these numbers will change rapidly before 2019, although it is unknown how the F1 numbers above differ year-on-year in comparison to the rest of the Sky Sports website.

What needs to be established is what, if anything, can the free-to-air terrestrial television networks in the UK bid for. The press release last Wednesday stated:

· Free to air: The FORMULA 1 BRITISH GRAND PRIX, together with highlights of all other races and Qualifying sessions, will be shown on a ‘free-to-air’ basis.

· Sky Sports Mix: Additionally at least two other ‘prime time’ live races a season will be offered on the soon-to-be-launched Sky Sports Mix along with other F1 content.

Sky’s press release was titled: “Sky Sports to become exclusive home of F1.” My instinct is that Sky’s interpretation of free to air will mean them showing free to air content on either Sky Sports Mix (beyond the commitment above) or another Sky free to air channel, such as Pick TV. There is no legal obligation for Sky to sublet the highlights rights to a terrestrial network. This is only something we will find out a definitive answer to in time, but as with everything in F1, I wouldn’t assume anything.

As with the change from 2011 to 2012, and more recently with the change from BBC TV to Channel 4, there needs to be a strategy in place to slow down the haemorrhage of viewers. If there is not a highlights package available for terrestrial networks from 2019, Formula 1 needs alternative viewing methods implemented and running by the start of the 2018 season. By alternative, I’m referring to an over the top network. Alone, a highlights package, like now, on F1’s website is not good enough. It needs an alternative online source to entice viewers in, who cannot afford pay TV or Sky’s services, for people who are simply interested in F1. The reason I have stated 2018 is so that the transition period can begin, a phased approach (the word ‘agile’ comes to mind).

Regular readers will be familiar with the ‘over the top’ phrase given my previous comparisons with the WWE Network. If F1’s deal with Sky restricts the ability to do that, then the deal in my opinion is damaging to the overall health of F1. I find it problematical if Formula One Management’s (FOM) contracts with broadcasters worldwide are being signed for the ‘here and now’ as opposed to ‘the future’, almost as if the rights holder has neglected to realise that the future is significantly different to the ‘here and now’.

James Allen posted the following on his site:

Over the top services you refer to are very much part of the future but this deal means that F1 is going to do them with Sky, rather than in competition with them.

Reading into that comment, the suggestion appears to be that an over the top network will be a collaboration between FOM and Sky. My main worry is that the over the top network will have Sky branding on it, which I hope will not be the case. Any F1 Network needs to be a FOM branded product that can stand on its own, independent and free from any broadcaster. A ‘Sky F1 Network’ is less appealing than a ‘F1 Network’. It implies that an F1 Network needs Sky branding to be successful.

It is plausible that FOM may want to utilise Sky’s technologies for an over the top network, as opposed to a branding exercise. A potential scenario would be an F1 Network to be a standalone platform, with a discounted price for Sky or Virgin Media customers within the UK. How would this all fit in with Sky’s exclusivity? From the outside, it is not clear what FOM’s road map is, and I think that is the main concern. “In two years’ time, we want to be doing X, Y and Z.” Last Wednesday in Sky’s press release, Sky announced that ultra HD will be coming to F1 in 2017. Should this not have come directly from FOM rather than Sky announcing it on their behalf?

This is not to undermine the work that has gone into FOM’s social media channels by their digital media team, it is about wanting to know the direction that the various outlets are heading in. There is a lot of legitimate concern right now about the direction F1 is heading in, and I include social media, over the top distribution and exploitation of new media in that. If F1 is going to continue to sign exclusive pay TV deals, then they need an action plan on how they aim to reach fans that do not have pay TV. Otherwise, F1 will haemorrhage fans.

A Formula 1 only accessible behind a pay wall is not a fruitful Formula 1.

A Formula 1 that exploits social media, is available to fans at a reasonable price, and finds new, innovative ways to harness their audience, is a fruitful Formula 1.

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21 thoughts on “Reflecting on Sky’s F1 2019 announcement

  1. When the commercial chief of F1 tells the British press that the current state of F1 was “the worst he’d ever known” and that he wouldn’t pay to take his family to watch a race why should anyone want to pay to watch it on TV?
    Unless F1 can get its house in order before 2018 I fear that even more fans will leave regardless of any over the top network.
    Certainly on various fora many long term fans have said that they will stop watching once Sky takes over completely. How many will actually do so remains to be seen.

    Personally I’m finding endurance racing increasingly interesting and Formula E has great potential…

    • Could be a great opportunity for the likes of Formula E if it stays on FTA. It could become the only regular racing series that the masses can tune into, attracting sponsors etc and dovetailing with the increase in electric car use.

  2. I think it is terrible that live F1 racing has been removed from Terrestrial TV. I understand that sports such as Football are missed and highly regarded, but the Premier League has never been broadcast FTA (no Football comparison inteneded). F1 has had FTA coverage since it’s inception in 1950 and full year-riund coverage from 1978 (on BBC, then ITV).

    Also, no PSB can fight with Sky on Budget front but could make the difference up in viewers and sponsorship on either ITV or Channel 4. At this point the BBC would have been screwed. Overall, it proves 3 sets of people are greedy; Ecclestone, CVC & Rights Holders (FOM) and BSkyB. Yes, the BBC can’t provide you with a Billion pounds, but can give top ratings (as seen in drop off in 2016) and top quality broadcasting, unlike Sky Sports.

    Finally, it would have been good to have seen the BBC join with another PSB in 2011 (won’t happen now). If BBC/C4 split the rights, all fans would be happy. e.g. C4 have Live coverage of every Grand Prix weekend and the BBC have Live coverage of top 5 races (Britain, Season Finale, Canada, Belgium and Brazil) and have extended highlights of all others. This would have kept good ratings (2 FTA broadcasters), good Sponsorship deals (C4) and would have allowed the BBC to save even more, maybe just £7.5million a year, instead of £15million. Then they would have saved an extra £30million over 4 years (2012 – 2015) and F1 would be on the BBC in some form in 2016, but more importantly, they wouldn’t have lost their Golf coverage either until 2017.

    • We already know that Channel 4 tried to get a leg into F1 when the BBC wanted to split the rights for 2012 onwards. Based on that, I think it’s a safe assumption that BBC shunned Channel 4 and preferred Sky as its partner so that they won’t have competition from another FTA platform. After all, if Channel 4 broadcast #EveryRaceLive, why would anybody have bothered watching some of the races on the BBC?

  3. It will be interesting to see C4’s viewing figures from this Sunday’s race, compared to what the BBC used to achieve. If the drop is as large as was the case for C4’s Aussie highlights, then it suggests that the casual F1 viewers have more interest in the channel itself rather than F1.

    • Agreed, but BBC1 has 26% of TV viewership, which is why it dragged in so many viewers at the most important times compared with about 14% for Channel 4. Also, certain people (stuck up) will usually only watch BBC services because it is what they grew up watching. With Channel 4 they should gain more younger viewers and channel hoppers, but it will simply be true fans without extra cash following the sport to where it has gone.

      • I agree, which is why just saying it must be Free To Air isn’t the simple answer it’s made out to be. If it went to Channel 5 for example, I would expect the viewers to plummet further, partly because some do not like Richard Desmond and his other business activities.

        As you also say, it’s the true fans who will watch C4, I think F1 has a higher than normal percentage of casual viewers, which is why I don’t read too much into viewing figures in general, Sky having exclusive rights etc,

      • Andy – Dirty Desmond sold Channel 5 to the company behind MTV and Comedy Central some time ago so he’s not a reason to not watch the channel anymore – although clearly part of the deal means the station is still plagued by non-stop ads for his lottery…

        I do wonder if the Sky announcement means we will never get a true reflection as to the success C4 might have made of F1 – a double whammy of C4 at some point deciding to cut back it’s investment ongoing, and some viewers starting to wean themselves off the sport (either conciously or subconciously) by watching it less and less and losing interest, if they’ve decided it’s not something they will still be watching come 2019.

  4. I wonder what the teams of formula one are thinking?

    manor, sauber and force india clearly have financial problems and now get sponsors for key uk market have just got an awful lot harder

    Honda and Renault are clearly in it to sell cars and if they going to lose the coverage in 3 years times they must be thinking is it worth it? Renault must be really mad as this could have made them leave f1 last year. why would they want to spend millions know key car market is now losing a lot viewers in few years time

    Williams Ferrari and Mclaren are pure breed race teams and race and thats what they do but williams is in weaker postion because they dont have as many viable outside income sources..

    Merc must also be think we will win next three championships and then say we have achieved what we want and then leave.

    But the key for me is Red Bull. They have 2 teams a owner who is there because he wants to advertise his soft drink and the ability to either close both his teams and do something else or even create a new red bull grand prix series.

    • The potential drop in UK viewing figures will not concern them at all. They are in it for the success and the vast marketing power that it subsequently brings.

      • but if there’s no one there to see it it means nothing. just look at cricket which is stuck behind the paywall, england have had some big wins in recent years but it barely makes a wave. who sponsors the cricket team? not a clue and that’s a national team let alone an individual f1 team

      • Waitrose, I know because I watch Cricket. I have no idea who sponsors the England football team but they are on FTA. So it’s also about who watches as well as how it’s shown. For the car manufacturers, F1 is a development tool. Success pays dividends for them outside of F1, that’s where the marketing power is, which is why viewing figures are of a lesser importance.
        It does impact sponsors, but by how much – who knows. Take McLaren, they don’t have a title sponsor again this year. Firstly, their performance is the main cause. Secondly, they were bank rolled to the tune of 100 mill. by Honda so it wasn’t a financial necessity.

  5. Imsa sports cars. . Nascar….. Indycar…. Formula E and I believe WEC all make full race reruns available on their YouTube channels… Can’t F1 do this with theirs??? Save having to see the dodgey reruns people put out

    • Sounds great, but would have thought that the sort of people that only watch fta freeview would not really be those who watch any youtube.

  6. Many of us used to believe that Max had put a clause in the 100 year agreement that guaranteed FTA coverage of F1 in the UK. But of course any contract with Bernie involved has only the tip showing and the remaining 90% in the form of a Gordian knot.

    Stlll if CVC’s shares in Delta Topco are sold soon maybe things will change. If not then F1 is doomed. The drop in audience figures will frighten away what few sponsors are left and teams will disappear again.

  7. 3 years is a long time – especially for fans to fall out of love with F1. Just look at the farce with qualifying, overtaking aids, fuel restrictions, tyres not fit for the job – and that’s just the tip of the iceberg.
    The prices they’re paying for F1 is just ludicrous and someone eventually has to pay. And that’ll be the fans. Who are leaving F1 at such a rate, come 2019, SKY are gonna be sat on a product that they can’t sell.

    I point blank refuse to pay for a sport which is only on 20 times per year, and definitely not paying the bloated prices SKY want.
    In 3 years time, expect those prices to be a lot more than what people are currently paying.

    Even if FOM provide their own stream, the minute it has any association with SKY, people are going to be giving it a wide birth.

    SKY have a big problem looming (as all cable companies are starting to experience). Money has to come from somewhere. If the lowest rung of the ladder refuse to pay, the business model is doomed to failure.

    And 3 years times, probably no Alonso, Hamilton, Button, Vettel, Massa – popular characters who attract viewers.

    Less fans, less attendance at tracks, tracks go under, sponsors cut back, small teams go under, remaining fans leave due to lack of competition…. the cycle continues until F1 goes bust.

  8. Ultimately Formula One coverage was on free-to-air TV for the benefit of the tobacco sponsors who could bathe in the reflected glamour of Grand Prix motor racing every fortnight. The all-or-nothing drivers, the outlandish screaming cars, the pretty girls, the speed, the danger, the drama of a thrilling chase to the flag. How could free-to-air TV say no to that? Bernie made a very tidy sum out of the deal even if the racing was, in reality, processional.

    Cigarette advertising was slowly banned over several decades. Sport sponsorship was the last to go. Bernie and Formula One benefited hugely. Bernie needed a youthful audience back then, who could be hooked on the cars and then (hopefully) the cigarettes. Ten years ago they they were finally banned from applying their branding to teams, cars and trackside. Big banks took their place until the banking crisis forced them out.

    If the tobacco giants didn’t need Bernie’s racing car series, He would have followed the money to Pay TV much, much sooner in my opinion. Pay TV is a huge win for Bernie. The teams who are there as ‘pure motorsport’ outfits get guaranteed TV money if they can’t find sticker sponsors. But they have to do exactly as Bernie tells them, as he controls the purse strings.

    Marketing budget teams (Mercedes, Renault, Red Bull etc.) will have to put up with the reduced audience numbers or leave. If they left, Bernie,CVC and the remaining teams would financially benefit (also assuming fewer ‘historic’ bonus payments).

    If the sports pay-TV model collapses, and the supply of oligarch owned/wealthy nation state/basket-case state subsidised wannabe F1 race tracks dry up, Bernie will just take his circus and follow the money to somewhere else. Sponsors or no sponsors. Fans or no fans.

  9. @Markmag Thanks for the update, I didn’t know that he’d sold C5. Irrespective of the Sky deal, I think C4 have two problems with their coverage that will affect their viewing figures. Steve Jones is the first one, he’s like Marmite. The second is their varying line of of pundits, I think this will cause their viewing figures to fluctuate a fair bit as the casual viewer tunes in or out.

  10. The NFL recently put online streaming of its games on tender, and it has just been announced that the rights were won by Twitter, beating competition from Amazon and Verizon. This tender is separate from TV rights. So perhaps this is the direction that F1 is heading.

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