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.