Could Netflix’s involvement in F1 change how it is broadcast?

News that Netflix could be entering the race to bid for Formula 1 rights in the US is not unexpected, however, it could have massive repercussions on how the series is broadcast in the UK and elsewhere.

The current platform sees F1’s rights holder, Liberty Media, sell TV contracts across the globe. It was a business model established by Bernie Ecclestone during the 1980s where a broadcaster would bid to win the rights to show F1 in their territory. This not only allowed Ecclestone to sell the rights over and over in each country, but it would sometimes create a bidding war internally between broadcasters and it proved to be a lucrative revenue stream. The TV companies in return would receive the live feed of the action but they would be responsible for the programming.

It is this format which ultimately resulted in Sky signing a deal with F1 in 2012 where it ran alongside the BBC’s coverage, before it became the UK’s exclusive home to all the live races from 2019, after Channel 4 switched from showing half the races live to a highlights deal for all races plus free-to-air live showing of the British GP.

Sky has extended that deal, which stretches until 2029, and now also takes in its German and Italian channels until at least 2027. The trade-off being that F1’s over-the-top streaming platform F1 TV Pro is not available in those regions.

F1 TV Pro offers subscribers in other territories coverage from all 24 races, including unedited radio transmissions throughout the sessions, but the take up in Europe has been slow given the geo-blocked locations in the UK, Italian and German markets as a consequence of the Sky contract extension.

That’s all very well, presuming you have or can afford a Sky subscription, but by its very nature it already reduces F1’s potential audience reach.

Toto Wolff, Team Principal and CEO, Mercedes-AMG, is interviewed by Naomi Schiff, Martin Brundle and Simon Lazenby, Sky Sports F1

Photo by: James Sutton / Motorsport Images

In the US, Liberty Media has strong links to broadcaster ESPN. Keen to see the series grow in the US, Liberty offered ESPN free rights to F1 in 2018. The Disney-owned channel has since paid $5million a year between 2019-2022 before signing a new agreement in 2022 – believed to cost $90m a year – that runs until the end of this year.

While Sky has invested heavily in technology and programming, there has been very little from ESPN, who rely heavily upon Sky’s output, despite a significant growth in US TV audiences.

As a result, Sky will be mindful of the Netflix effect, given the streaming service has the potential to flick open a market with ease and, seemingly given ESPN’s scant programming and lack of investment, how little that actually matters to new markets.

For instance, will Sky be questioning whether it needs all its presenters and TV crews on the ground at each race? Is there really a requirement for deep debriefs into races for casual fans? Or indeed the costly pre-session features it produces?

This writer would argue yes, as it makes a better product, but the reality is general audiences may not agree or more likely care.

Liberty Media is aware of this too, which is why it offers its F1 TV Pro service, which can provide all the analysis avid fans require, but in the form of a subscription that runs directly back to the rights holder.

In terms of Netflix, its foray into live sports should be of no surprise given it hosted the Netflix Cup, the streaming service’s first live sporting broadcast, a crossover of F1 drivers and professional golfers competing in an event ahead of the 2023 Las Vegas Grand Prix.

Burke Magnus ESPN, President, Programming & original content, Stefano Domenicali, CEO

Photo by: Carl Bingham / Motorsport Images

Plus, Netflix recruited Kate Jackson last November to run their live sports output having previously led ESPN’s F1 coverage in her role as vice president of production.

And, of course, Netflix’s long-standing association with the Drive to Survive series which has run from 2019 and been widely credited with helping grow F1’s appeal.

Sky will also be mindful of how Netflix can point to its global platform and the way it was able to open up NFL to a wider audience with each game attracting over 30 million global viewers from 218 countries – even on Christmas Day.

In the short term, the US F1 rights deal should not impact Sky, as it has a contract until 2029.

Insiders feel that it is more than likely F1 will broker deals with a number of US broadcasters and streaming platforms in an attempt to broaden the championship’s footprint in the US.

It is a similar model to other American sports with the NFL spread across five different broadcasters, while Apple has bought into MBL only for Friday night games and Amazon now has a package of NBA games. In the UK too, Premier League games have been split across Amazon, TNT Sports as well as Sky.

Netflix camera

Photo by: Netflix

It all points to the days of exclusivity being over. By opening up markets to new audiences, it gives F1 more opportunities to grow.

F1 has to open up to new ways of showing itself, and that is likely to have wide-reaching implications not just for the US and the UK markets, but how it handles its global broadcasting.

Yes, those regional TV contracts of the past were lucrative, but they were also inhibiting F1’s growth. As we have already seen through Drive to Survive, by offering F1 to viewers on an alternative, global platform – and one that is accessible to them – it has the potential to open up a whole new market, which is worth considerably more than an exclusive TV deal.