Analysis: Could Amazon be F1's saviour?

39,769 views

Declining television viewing figures are not a new thing for F1, but as alarm bells begin to ring, Jonathan Noble wonders if the answer is delivering the content to the audience in a different way.

Formula 1's season ended more with a whimper than a bang, as the lack of an intense title battle took the edge off the finale in Abu Dhabi.

Indeed, it was another weekend where there seemed plenty more excitement in the paddock than there was on the race track.

The latest Renault developments, Red Bull's engine scenario, the Ferrari/Haas controversy and some Ron Dennis comments about Fernando Alonso and Kevin Magnussen set the gossip machines into overdrive.

Against the backdrop of the short-term intrigue, though, emerged more comments about the overall state of F1, as television viewing figures set some alarm bells ringing about whether or not F1 needed a bit of a wholesale rethink.

In the UK, overnight figures suggested the BBC coverage averaged just 2.21 million viewers, with Sky getting a mere 399,000 for the race slot.

While it was never going to reach the highs of a title showdown, this was the lowest season finale in a decade, and one of the lowest ever races that had taken place in a European timezone.

Germany did not do much better, with reports that audiences there on free-to-air have declined this year – from an average 5.28 million per race in 2013 to 4.2 million now. Abu Dhabi drew less than four million – two million less than 12 months ago.

Against the backdrop of that decline, some in the paddock were murmuring of a sport in crisis. And Alonso himself certainly added to that view when he suggested that the FIA should worry more about declining fan interest than handing out driving penalties.

Red Bull boss Christian Horner said that things were not quite so alarmist, but did concede that a time for action was looming.

"Crisis is a strong word," he said. "There are things that need sorting out for the future. We need strong leadership at any time of uncertainty.

"That is vitally important and we need strong leadership from the commercial rights holder and the governing body, to plot the path of the future that addresses what the fans need and what the fans want to see.

"Because without them, there is no F1. And F1 ultimately has to be a show. It has to be entertainment and it has to appeal to a broad spectrum of fans and spectators."

A new audience

Falling television viewing figures in F1 are nothing new. But what has always been hard to work out was how much of the decline is because fans are bored of watching F1, and how much is simply down to people no longer watching television per se.

It is hard to be exact when separating the two. But, judging by the growth of website audiences in recent years – some of which draw as many unique visitors a month as TV channels get tuning in on Sunday – there would be evidence to suggest that the audience is not disappearing: it just wants its content in a different way.

Indeed, the boom of internet coverage shows that F1 is a sport that can still attract the audiences, albeit ones that log on via laptops, phones and tablets rather than ones to pop down to the newsagent for a newspaper and magazine, or switch on their television religiously.

The challenge that F1 faces therefore is turning that web interest and engagement into the revenue that can sustain and even expand the sport longer term. For it is the old television business model that is still paying the big bucks, and the Internet is in effect still wild west territory: delivering no help for the bottom line.

And however much fans would love to be able to log on to the official F1 website and watch live HD streaming coverage, with exclusive interviews, onboards and analysis, to do so would be a business folly for Ecclestone.

He cannot breach exclusive rights that networks have in some territories, and it makes no sense for him to give away content that people will pay for.

It would be like running an expensive restaurant, and then wondering why your top-dollar paying customers are getting upset that you have suddenly decided to give away food for free out the back.

New opportunities

The media marketplace is changing though, and F1 is going to have to plot cleverly how it transitions from its current television business model, where revenues are going to decline over the next few years, to the new era of a full-scale digital platform across all devices.

One paddock insider with good knowledge of that media landscape suggested that the game changer longer term is delivering F1 broadcasts straight to the consumer, without the need to do deals with television networks in individual countries around the world.

"Direct to consumer will open up a huge door," he said. "It would allow a massive amount of information to be delivered direct, and viewer content for that would be massively engaging."

In the perfect world, of course, this would entail F1 fans paying a small monthly subscription to FOM to get access to a new world of digital grand prix entertainment.

This would include next generation HD television coverage on all devices, on-boards from all cars, instant live timing, the best GPS coverage, analysis, second and third screen coverage, and a host of other interactive elements that can draw in a new younger generation of fan.

On the back of that, with FOM in control of its own destiny of coverage, it would have no qualms about being able to unleash the most effective social media content, knowing full well it won't breach anyone else's rights, because it owns them all anyway.

Provide all of that for £2 per month, multiply that by the 400 million viewers F1 has, and suddenly we are into game-changing territory.

The direct-to-consumer concept must certainly be a long-term vision, but it is hard to work out how F1 goes about shifting to that model quickly enough to not make huge losses early on.

First of all, timing out the current television deals will not be so easy because many are staggered, so finish in different years – scuppering the means for a straightforward handover.

Plus, move too quickly to a direct-to-consumer model and the paying audience may not be ready. We have already seen the reluctance of audiences to embrace the pay-TV model in many countries.

What FOM needs in the middle term then is a worldwide digital media platform that is already omnipresent.

One too that has the financial clout and technical capability to deliver the best coverage to an audience that is already there, and one that has consumer already used to paying a small monthly fee for content.

Something exactly like Amazon.

New model

As the world has already seen with Jeremy Clarkson's move away from Top Gear, it was not one of the BBC's television usual rivals that successfully got his signature on a contract. It was Amazon Prime: exactly the kind of global video subscription service that F1 would love to have.

Amazon is already ready for all devices, is already in people's homes, has a global footprint and would be able to roll out in different regions over the long term, while ensuring that rights restrictions are not breached in certain territories.

With the potential numbers it has too, Amazon could easily deliver F1 with the kind of income needed to take it to the next level, replacing that which has come from traditional broadcast rights. More income for FOM equals more income for the teams too.

So what chance, when the big television rights deals – especially in America and the UK – come up for renewal again over the next few years, will it not actually be television networks fighting it for the new deals?

In fact, how much would Ecclestone love a bidding war between Amazon, Netflix and Google for a next generation digital rights deal?

Don't rule it out.

Be part of something big

Write a comment
Show comments
About this article
Series Formula 1
Article type Analysis
Tags amazon