How F1 secured the future of its audience
Additional reporting by Caroline Reid
Over the past three years, Formula 1 has transformed the way it interacts with its fans. It has beefed up its social media content, introduced an eSports league, developed a Netflix documentary series and launched the online streaming platform F1 TV Pro. These measures have boosted its appeal to a younger audience and, according to Mercedes team boss Toto Wolff, it is paying off.
The change in strategy came when current F1 owner Liberty Media secured the keys to the company in a $ 4.6 billion takeover in 2017. Making F1 more attractive to a younger audience might seem like a no-brainer, but it was actually a bold gamble like sport. had little track record of monetizing digital media. It hasn’t got off to a good start, as F1’s digital and social media division recorded a net loss of $ 1.9 million in 2018, according to its latest financial statements.
However, it had a much more turbocharged impact on the F1 audience demographics. This was revealed during a recent Q&A on Reddit with F1 Global Research Director Matt Roberts.
He revealed that although only 14% of F1 viewers are under 25, this is “in line with the world’s population” and “in fact, F1 has the highest proportion under 25 of all years. world sports leagues (except the NBA). Also, we have done a lot of work to determine who becomes new fans. 62% of new fans are under 35. Things like Netflix, esports, F1 TV pro, etc. have been extremely helpful in increasing these audiences. “
This made perfect sense during the coronavirus pandemic. Although the fatal disease affects all ages, according to the Centers for Disease Control (CDC) and Prevention, “as you get older, your risk of serious illness from Covid-19 increases.” Data from the CDC shows that COVID-19 causes 18.8 times more hospitalizations per 100,000 people in adults aged 85 or older than those aged 18 to 29.
Making F1 more appealing to an audience that has not been severely affected by the virus and is ready to return to normal life is music to the ears of F1 stakeholders. In fact, it could lead to an acceleration in car sales according to Wolff, who has led Mercedes to the F1 title for the past six years.
“What we are seeing in the auto industry with Covid-19 is that young people who normally say ‘I don’t need my own car, I can rent one or I will take public transport’ say now ‘I don’t want to take any public transport and I don’t want to take a plane to go somewhere’.
Wolff adds, “Suddenly there’s a big boost in independent personal mobility. It’s almost like being back in the ’70s when owning a car meant freedom. And there’s a good chance these potential customers are looking for a car. Mercedes because it is a winner in Formula 1. The visibility of Formula 1 is always enormous. “
F1’s TV audience has reversed from a peak of 600 million viewers in 2008 to 471 million last year. It was fueled by a shift from free-to-air channels to pay-TV networks with the latest losses, notably RAI in Italy and RTL in Germany.
Pay TV stations tend to have smaller audiences than their free counterparts because they charge viewers to watch. This in turn gives them bigger pockets than their rivals, which is why F1 broadcast revenues have accelerated 69.5% to $ 762.8 million since 2008.
In contrast, the number of unique viewers watching F1 has declined. Calculating this involves counting someone when they have watched a certain number of minutes and not recounting them even if they are watching more.
The alternative method is to count each viewer in each F1 session separately, meaning someone who watches multiple races will be included multiple times. Using this cumulative methodology shows that the audience grew 9% to 1.9 billion last year. “The number has increased despite the fact that we lost RAI in Italy. We lost TF1 in France and we lost the BBC in the UK. I mean it’s a miracle for me,” Wolff says.
“The audience has grown despite the fact that some countries have moved behind the paywall. I think it’s going to be like this halfway through anyway. I don’t think free linear TV is gaining a lot of market share. For me it’s an endangered species and the future is payment or streaming and the web and in that sense I think in terms of audience it’s a miracle that we were able to increase audiences amidst these changes in customer behavior.
“I actually wonder who is the customer who watches free linear TV these days? Not young people certainly. Young people are ready to broadcast or pay a subscription. That will be the future.”
Wolff is optimistic about the prospects for F1 which will hold its season opener in Austria this weekend after a three-month hiatus due to the coronavirus crisis.
Earlier this week, Liberty changed the terms of F1’s $ 3.4 billion borrowing to give it more leeway. In order to comply with the conditions, F1’s total debt to earnings should normally remain within a certain level. However, this limit was postponed to January 1, 2022 in order to give F1 time to bounce back from the crisis.
To reduce development costs this year, F1 will use its current car in 2021. Next year’s development costs will be reversed due to the implementation of a $ 145 million cap on the budgets of companies. teams and in 2022, sweeping new aero regulations are being introduced in an effort to spice up the action. Mercedes likes to take up the challenge.
“We build road cars and we build race cars. That’s what we do and we don’t shy away from the toughest competition,” Wolff says. “Every automaker needs to develop and build their brand. Buying or leasing a car is not a commodity, it’s an emotional task that is sometimes explained rationally such as better emissions or better battery life. at the end of the day, being in a car is always something that has a very strong connection to how you see yourself. “
Wolff says he believes F1 is as important to automakers in the pandemic as at any other time. “I think all brands have to go through the exercise to say ‘what do we need to do in terms of targeting our customers?’ You can’t fake what your brand stands for, so what could be more authentic for an automaker than to operate in the world’s most competitive and visible global auto racing entity? “