The challenges of making money from the F1 TV Pro streaming subscription service proves to still be elusive according to financial reports discussed by Forbes. After the first year of dodgy service, it was a bit harsh to learn that I had paid $99 for what F1 CEO cHase Carey called “almost probably a beta project”. I’m not in the habit of funding people’s beta projects as it were.
I auto-renewed for another year and it has been more stable but still with plenty of buffering to go around as well as a convenient way to deliver the same programming Ig et from the ESPN Watch app. Both simply carry Sky Sports F1’s coverage but not all of it.
The financial analysis I leave to Christian over at Forbes:
“They add that last year revenue accelerated by 120% to $22 million “driven by the launch of new product offerings in 2018 including the F1 TV Pro service, updated mobile applications, and the purchase of digital advertising inventory by a fellow Formula 1 subsidiary.”
Revenue from subscription based services doubled to $6.1 million but still represents just 27.9% of the total with the remainder coming from other digital media rights.
The red ink was driven up by a 56.5% surge in costs to $24.1 million. That includes payment of a $1 million license fee to F1’s operating company Formula One World Championship for the digital rights but even without it, the division still wouldn’t have made a profit as its operating loss came to $2.1 million. It was fueled by the boost in costs which doesn’t even include any of the staff working on digital media as they are all employed by a separate F1 company Formula One Management.
The company’s net loss narrowed from $4.4 million in 2017 but it still came to $1.9 million last year giving a shareholders’ defecit of $14.7 million. Ominously, as recently as May, criticism of F1 TV Pro was still flooding in and three months later Carey described it as a “work in progress.” However, he added that it is “getting closer to our targets both in terms of content and reliability.”
In the end, the real issue is the programming. If F1 was determined to offer a streaming package for those who don’t have ESPN, then it makes sense but I feel like they are missing a huge opportunity to create their own broadcast package. Perhaps that’s the rub, if they did create their own broadcast coverage, it would compete with Sky and others so maybe that is the conundrum they are in.
Regardless, it is not profitable as it should be, it doesn’t carry all of Sky’s coverage and features and it tends to suggest that it is a “me too” product. That’s unfortunate because transmission is still buffering and content, which is king, isn’t being made rather re-broadcast from Sky.
If there is no desire to create its own coverage and packages, then it will remain as a tool for those who do not have the broadcast packages of ESPN for example. A shame because they have Will Buxton and Jason Swales who would do a bang up job of creating lots of weekend coverage packages you could only get on F1 TV.
Another part of Chris’s article that caught my attention is the quote he included from an Autoweek article:
“Formula One’s audience is older, it’s wealthier and it is very sophisticated but while they love technology in Formula One, they don’t want to watch it on their phones, or their iPads or their computers. They want to watch it on a big screen. The average age of a Formula One fan in the US is 59 years-old and that viewer is not going out and buying apps especially if he can watch it for free on ESPN.”
Doesn’t apply to me at all. I have multiple monitors open during the race but if this is the case, then you can understand why the launched the eRacing series and are trying to get races in city centers where all the hip kids are. Therein lies the issue, simply re-streaming the Sky Sports F1 package that the old codgers are watching on large TV’s isn’t the answer. The F1 TV service should offer a whole lot more to appeal to the hip kids.
Hat Tip: Forbes