Can Formula One survive a post-free-to-air world?

By Michael Lamonato / Expert

Both Lewis Hamilton and Mercedes will vie for their respective Formula One titles at this weekend’s United States Grand Prix, but only around 30 per cent of Australian households will have the opportunity to watch it.

The sport moved exclusively to pay television this month.

Free-to-air Formula One was wrenched suddenly from television sets during the Malaysian Grand Prix weekend, reducing Network Ten’s ten-race live allocation to just one race – the Australian Grand Prix, legally mandated to be available for free – in what is now the new norm for Australian audiences without access to the viewership wilderness of pay television.

It would be unfair to say that Ten has acted in poor faith with fans, however, with its hand – or perhaps more accurately the hand of administrator KordaMentha – forced by the mechanics of the ailing network’s impending acquisition by CBS.

A creditors report released last month reveals that Formula One is an unsecured creditor in the station’s demise and that the successful CBS deal would repay only $2 million the $20 million owed to it.

Needless to say F1 was unlikely stand idly by and cop such a loss, and F1 global director of media rights Ian Holmes alluded to as much in his statement.

“Following the recent difficulties at Network Ten, our first priority was to ensure that Australian fans of Formula One remained able to watch the championship without interruption,” he said.

“I’m pleased to say that, having moved quickly, it is now guaranteed that anyone in Australia who wishes to watch … will be able to do so …”

Foxtel, however, remains pricy, with a cable subscription including sport coming in at $55 per month. Foxtel Now, a lightweight online service, reduces that by $16, but with only around 50 per cent of the country connected to the NBN, live television streaming is frustratingly unreliable for many, including this writer and his humble ADSL connection.

Where does that leave Formula One in Australia?

To put it lightly, in a fair bit of trouble.

Australia has always had a core Formula One following, but there’s no denying the bulk of it stays afloat on the success of Daniel Ricciardo. When Daniel’s up, so too is news coverage and social interest; when he’s not, it’s not.

An Australian colleague put the question at the Japanese Grand Prix: what happens when, sometime in the next decade, Daniel hangs up his helmet?

(Aron Suveg/Red Bull Content Pool)

Can Formula One still be sustainable in Australia without a home hero to cheer on at 10pm on a Sunday evening? Certainly the nation’s ongoing enthusiasm would have to be called into question, as would be the health of the Australian Grand Prix itself, for which race organisers have openly acknowledged the ‘Daniel Ricciardo effect’ has boosted ticket sales.

With no other Australian Formula One hopeful on the immediate horizon, drawing the conclusion Formula One’s popularity in Australia is on the precipice of a terminal downward spiral is worryingly easy.

There is, however, a sliver of light in this increasingly dark tunnel.

One week after Foxtel’s announcement a similar proclamation was made for the United States market. Broadcasting rights will transfer to ESPN from next season in a shock move that ends NBC Sports’s four-year association with the sport – but it’s the latter’s exit reasoning that is most interesting.

“In this case we chose not to enter into a new agreement in which the rights holder itself competes with us and our distribution partners,” its press statement read, making a not-so-subtle reference to over-the-top broadcasting apparently being on Formula One’s horizon.

Could broadcasting direct to the consumer, cutting out the expensive Foxtel middleman, be the solution to keeping F1 in the Australian consciousness?

The only question, naturally, would be the cost to view. Foxtel subscription numbers remain modest because the price point is high; Formula One would have to find a happy medium between affordability and profitability.

However, a non-scientific straw poll of internet forums and comment threads – emphasis on the non-scientific – suggests that Australians are generally unwilling to pay for most content. This is exhibited across a range of media, from news websites to television, and indeed one could set a watch to the regularity of articles calling Australia the world’s piracy capital after each Game of Thrones release.

But on the other hand, according to a Deloitte report, in the reasonably short time Australia has had access to a healthy gamut of entertainment streaming services their subscription rate has grown beyond that of Foxtel, a 22-year stalwart of the media landscape.

A question of the right content for the right price, surely – but that balance is easier said than achieved, putting great onus on what Formula One does next when it comes to the sport’s future in Australia.

The Crowd Says:

2017-10-24T01:08:41+00:00

Daz

Roar Pro


I think this should be the distinction. Pay tv takes live, ad free coverage of every event across the whole weekend. Free to Air takes maybe a highlights of the pre race events and a delayed (even if it's 1/2 or 1 hour) of the race, with ads.

2017-10-24T00:54:21+00:00

Daz

Roar Pro


The problem with highlights is that most sport is watched live nowadays, and results are known immediately. There is virtually no appetite for highlight packages, hours or days after the event.

2017-10-24T00:51:36+00:00

Daz

Roar Pro


Honestly, I doubt I would, unless it was less than $30-40 for a whole season. You'd be lucky to find F1 on at a pub anyway. More likely, they would change the channel to rugby, football, cricket, or even golf if there was no NRL/AFL on. The 10pm (or 2-3am for races in the Americas) makes it difficult, but I think the fact that there is only one race anywhere near Australia is also a major issue. Lack of local access means people aren't as engaged as they are with a sport they can turn up to every week.

AUTHOR

2017-10-18T22:28:53+00:00

Michael Lamonato

Expert


Yeah, and hopefully this is where they're going. I really advocate for a MotoGP model in this regard — when you watch MotoGP coverage on Sunday you don't get the impression that you're watching three different series; they all feel interconnected. It starts with the fact there's a good degree of crossover between the two commentary teams (I think the only difference is that Nick Harris doesn't to Moto2/3), which then means the way they present MotoGP is more inclusive of the whole weekend of racing rather than being narrowly focussed only on the one category. If FOM treated F2 and F3 in the same way it does F1 rather than pushing it off to one side as a mere support category, everyone would benefit (also there'd be three times as much racing/content each weekend).

2017-10-18T15:13:32+00:00

Chancho

Roar Rookie


hahaha @ the Bernie interview!!! It gets a good run that one! There's one of Ted going to the Renaul F1 engineering academy and he's trying to be funny... I've seen (cringed) at that one more than I care to remember. I don't watch 4 because I have Sky, but from all accounts they do well. They are far superior on social media than Sky though. Your point re Bernie interview replays, I think this is endemic of the problem, there is an ocean of good content out there, racing content at that, but not getting shown. I recall a few months ago you did an article about the lack of attention other categories get, I think you started it with a simple question like "name the podium at the last GP2 race"... as a way to show that F1 dominates all other categories too much. They show GP2 on Sky, but if they did a better job of highlighting some of this racing, give it some attention, you'd have more racng content.

AUTHOR

2017-10-18T04:06:04+00:00

Michael Lamonato

Expert


Fingers crossed! Obviously it's difficult to tell what F1 on TV could look like in the next five years given we don't know what was in the Foxtel contract — whether it's exclusive to Fox, whether Fox has bought the right to sublicense the rights to a junior FTA partner etc. A free-to-air resumption could be around the corner for all we know, that it'll unlikely be with Ten given the unhappiness between the Murdochs and the whole Ten sitch... The commercial rights holder seems to have a plan, at very least, which is more than could be said of the sport not so long ago. Some of it will simply be experimenting given motorsport isn't really like other sports in terms of broadcast consumption, but so long as they listen and adapt as they go — which they certainly seem to be doing — then hopefully we'll reach a place that can satisfy the most number of people.

AUTHOR

2017-10-18T04:02:45+00:00

Michael Lamonato

Expert


It's hard to believe Foxtel still charges just to watch in HD! I have the internet version of Foxtel and I'm lucky to get SD coverage, though... I don't blame you. I wouldn't hesitate so much paying for the sport package on its own if I could, even if it were $25 or per month, but it's the fact you have to pay for a 'base' package packed with channels you won't watch is what I find most frustrating. In fact $25 per month for the amount of sport Foxtel broadcasts is reasonably good value. Maybe that's the road it'll ultimately end up going down if the likes of Netflix and others continue to steal subscribers.

AUTHOR

2017-10-18T04:00:14+00:00

Michael Lamonato

Expert


Hi mate — completely understand about Sky Sports F1! The place I was staying during this year's British GP had a subscription, and I was disappointed to find that it mostly repeated the same handful of old content every day. I can't tell you how many times I've now watched Martin Brundle visiting Bernie Ecclestone's house in Brazil! I suppose that's a pretty good argument for video on demand (like Netflix etc) over having a 24-hour F1 station. I hear C4 is doing a great job, but I've only been able to see bits of it over the years given we get the Sky coverage in Australia on Foxtel. I remember when the split model started in the UK and thinking that it might actually work out okay given F1 interest is high and replays would be on at reasonable times and not too long after the race itself, and I think that's sort of happened, though viewership still hasn't returned to its BBC highs. It's harder in Australia where, like you say, it's a small market with races on at obscure times. It's a shame the UK market is going the same way as we are in the next few years and losing FTA — but hopefully whatever the commercial rights holder is planning to save viewership will have come to fruition by then.

AUTHOR

2017-10-18T03:55:22+00:00

Michael Lamonato

Expert


Thanks for the comments, Paul! You raise a lot of good points, especially about what F1 has to offer from a digital broadcast standpoint. Already the sport is working on ways to broadcast 360-degree footage in real time, which would completely change the way we'd experience racing. I know what you mean about pay TV feeling like a backwards step — I suppose it's chiefly because there are just fewer viewers there. What I think is interesting is how pay TV is viewed differently around the world. Australia and (I think, but perhaps to a lesser extent) the UK just don't have the pay TV mentality, perhaps because we have a strong history of FTA sport — we have legislation protecting certain sports from disappearing behind a paywall, for example. On the other hand, 'cable' pay TV in the USA is more widespread, which might make a subscription over-the-top model more successful there, where paying for sport is second nature. Will one side of the debate just have to adapt? Hard to say. Certainly F1's ratings have spiked and troughed over recent times. When Webber was in the heat of the 2010 title fight Formula One coverage became genuinely valuable for Ten. It's hard to know whether that was the highest point reached and how it compared now, though.

AUTHOR

2017-10-18T03:50:30+00:00

Michael Lamonato

Expert


Thanks for the comment, mate. I think a lot of people are feeling the same thing. Given how fragmented the TV market has become — like you say, ISPs are getting in on the game themselves now — it'd be interesting if F1 offered an F1 channel to a bunch of the minor players so you could subscribe to it via Optus or Telstra or whoever as a way of maximising how many people have the opportunity to subscribe easily. I don't know if this is in the works at all, but it could be a way forward — F1 has experimented with being its own station before, albeit with poor results, but the opportunities to pull such a strategy off today are greater than they were 15 years ago.

AUTHOR

2017-10-18T03:47:58+00:00

Michael Lamonato

Expert


Yep, that's absolutely true. Australia's a small market in a global sense, so we're never going to be critical to the sport overall. The Australian Grand Prix contract runs one year after the new Foxtel deal expires, so as long as the race persists, there'll always be a bedrock of viewers to tap into when the environment changes.

AUTHOR

2017-10-18T03:46:14+00:00

Michael Lamonato

Expert


MotoGP, as I understand it, is around the $200 mark for a season pass (not considering preseason discount rates, which are more like $150, nor the discounts you get if you subscribe later in the season). That's approximately $12 per race, which isn't terrible value, especially when you consider the video offering is fairly comprehensive. But, like you say, the sheer quantity of content can't match a league like the NFL, which is better value in that sense. That's why I think what F1 provides on top of the races themselves — other programming, pre and post-race shows, commentary styles, camera angles etc — will be important. Maybe a subscriber would have access to the back catalogue of races, for example. That'd be pretty epic.

2017-10-18T00:30:42+00:00

Bayden Westerweller

Roar Guru


Liberty would be loath to squander the local market, so you have to assume that OTT is coming sooner than later, and its move to restructure the present arrangement was immediate term damage limitation from Ten's woes, regardless where the latter shakes out once the CBS acquisition is concluded. Hopefully once this comes to pass, there's an opportunity for a greater FTA presence to resume with any of the networks, as Liberty brass have mentioned the need for a hybrid offering across the mediums, and foremost a visible incentive to sign up to its own service.

2017-10-17T22:11:31+00:00

bazza

Guest


The NFL season pass is 280 a year. So season pass is not always cheap option. That's for less than 6 months of games. However it does give you condensed games in option which is an awesome feature and allows you to watch a NFL game in 35m

AUTHOR

2017-10-17T21:55:35+00:00

Michael Lamonato

Expert


Yeah, I share that concern about Sky. The station does a fine job, but at the end of the day it's the British broadcaster — either it stops playing to the Hamilton/British audience or F1 should put together its own neutral team. I'm optimistic the new commercial rights holder will make an effort to move back towards FTA in these sorts of markets. At the end of the day viewers do count, even if they're not immediately monetised by subscription fees. How this happens and when, though, is anyone's guess given the various contracts already in place.

2017-10-17T14:41:20+00:00

Terence Seymour

Guest


I at present pay $89 a month for iQ2 this gives me sport and everything other than HD however I am concidering giving it up next year as most of the content is old as is the case of chasing classic cars. The F1 coverage is grea.

AUTHOR

2017-10-17T14:22:03+00:00

Michael Lamonato

Expert


You raise some good points, Chris. In particular how F1 prices itself and then justifies that price when most other sports are working with substantially more content and the fracturing of the market. I've often thought about what happens when content, not just sport, splits into more and more exclusive channels. If people only subscribe to one or two of what could be 10 different streaming providers, inevitably they're going to miss out on some things. It's an interesting question we'll have to confront one day. I think a happy middle ground would see more comprehensive highlights of each race on FTA and at a more competitive time than late Monday night — enough to follow the sport and retain that vital stumble-on value you talk about for casual viewers but not so much a hardcore fan wouldn't be interested in moving up to a paid tier of coverage.

2017-10-17T11:43:35+00:00

Chancho

Roar Rookie


Hey Michael, this is a good article! Just to throw my weight in on this debate... here in the UK we get a dedicated F1 channel on Sky with live broadcast of FP1/2/3, qualifying, and the race... BUT... there is a huge amount of filler to bulk it out in between, most of it banal and inane, in fact, I hate it. But because that broadcaster has paid so much for the rights they need to have content. But because Bernie had always maintained that he wanted F1 to be on FTA there is a little carve out. An FTA channel, Channel 4, show some of the races live, and a replay of all the races a couple of hours after the race. Naturally this is a commercial discussion between the commerical rights holder and the broadcaster, but it's a system that seems to be working - but as is pointed out, there needs to be the interest, plus Australia has the problem of being such a smaller market and the inconvenient time zone too

2017-10-17T10:53:33+00:00

Paul Roach

Roar Guru


I've been a subscriber to Foxtel/its sports package since it was financially viable for me to do so - ten years, maybe more - but a little piece of me dies whenever a sport migrates off FTA and onto cable. It does seem like a backward step for that particular sport. Not that in this case anyone 'decided' to take that backward step, as the financial realities of the Channel Ten situation described in the article points to. That's just 'the market' for you... But can F1 survive in Australia? Well, I would hazard a guess that Fox didn't just shrug its shoulders and hope that taking on the Sky programming (which is utterly brilliant by the way. Sorry Ten, but it was such a joy to get the UK coverage a few years ago) would be worthwhile. Surely there's a rusted-on element, who pays for the privilege, that means we get enough coverage to satisfy a critical mass of people (and vice-versa). The Ricciardo effect is an interesting one. I don't have figures to hand but presumably viewership of F1 was healthy enough in the pre-2002 (i.e. Webber) era to warrant Channels Nine and Ten broadcasting it. I know that's half a generation ago but it does suggest that there at least has been that critical mass of fans/viewers of F1 in Australia before Aussie drivers were at the pointy end. And as to it surviving in a post-FTA world...well that's just where the whole world is going isn't it? Wouldn't surprise me if, given all the behind-the-scenes stuff F1 has to offer (e.g. technical, just for starters), which lends itself beautifully to OTT and AR, it will actually thrive. Bring it all on, I say.

2017-10-17T04:26:57+00:00

Redbullfan

Guest


I have been a huge f1 fan for over 30 years watching every race regardless of when it was broadcast but with it now on foxtel and being on a tight budget i can only hope the new owners of f1 realize that they are cutting of a huge number of new and existing fans with this change if they new owners start a live streaming service of each race at a reasonable price ill pay if not i guess like thousands of others ill just stop watching and switch to indycar on espn which i get included in my broadband package from my isp

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