F1 needs a year to overcome OTT bugs, as McLaren attracts ex-NFL executive
Formula 1 has admitted it could take a year before hitches at F1 TV, its troubled over-the-top subscription service, are fully resolved, but the sport was boosted by a twofold increase in revenues in the first quarter of 2019.
F1 TV was launched, behind schedule, for last May’s Spanish Grand Prix, and expanded to new markets at the start of this season, but, as the anniversary comes around, it is still experiencing bugs and other technical problems, with a failure at the latest round in Azerbaijan prompting refunds to be paid to disappointed viewers.
Liberty Media, the US media giant that acquired Formula 1 at the start of 2017, sees the platform as a potentially significant revenue driver, and chairman and chief executive Chase Carey is not overly perturbed by the challenges to date, believing they will be overcome in the first half of next year.
Speaking on an investor call to discuss Liberty’s results for the first quarter, Carey (pictured) said: “I think, we actually felt pretty good about the product. The issue that arose in Azerbaijan really was sort of unexpected.
“That’s the nature of these platforms. So, I think you have to deal with it. And to some degree, the unexpected, obviously, is always troubling. But it was not in the main stack of what we’re trying to build there. I think that the unexpected will occur occasionally but I think we felt we made pretty good headway.
"We're not far enough along where there won't be another problem, but the problems before that had been probably quite manageable. These things aren’t perfect and it’ll probably still take us another year to get all the small bugs out of it.”
"But the significant glitch we had there was really something outside the core of what we've been building in the platform. And so we need to make sure we're looking at it in a wider context, but I think the core of what we expected to be in the platform, I think we actually feel is functioning pretty well. Not perfect, but pretty well."
F1 TV was rolled out in eight new European markets, including Denmark, Greece, the Netherlands, Norway, Portugal and Sweden, in February, taking the number of territories in which it was available to more than 60.
Enhancements have also been made to the premium subscription service F1 TV Pro, which offers live coverage of the racing, except in selected territories where there are lucrative TV rights deals.
Carey claimed that the next stage in the development is to integrate archive footage from 1980s and 1990s into the service.
He said: “It really isn’t there. So, there’s still a lot of work going on to expand and build the content and in all honesty, it’ll probably never stop. But I think to get the content, sort of where we want it to be in I guess what I’d call Phase 1, we’ve got a fair amount on that we’re working on now.
“And so it’s probably between the beginning of next year and the beginning of the following year that we really get to sort of the Phase 1, what we feel is the over-the-top product that we probably envisioned going into it.”
“I think we initially probably thought we could get there in two years. Obviously, last year, we were a bit behind. So, probably what initially we thought we’d get there in two is probably more likely in three.”
Q1 progress The Liberty results show that Formula 1 generated $246 million in revenue in January to March of 2019. This compares with $114 million in the same period last year.
The growth is attributable in large part to the fact there were two races in the first quarter, up from just the Australian Grand Prix a year ago.
However, Liberty also flagged up new and extended broadcasting rights contracts with MBC in the Middle East and North Africa, Sky Deutschland in Germany, DAZN in Japan and Eleven Sports in Poland, and sponsorship deals with CYBER1, Liqui Moly, Puma and Sotheby’s
Meanwhile, the operating loss was cut from $118 million to $58 million.
In a statement, Carey said: “This quarter we announced multiple deals, securing full broadcast coverage for the 2019 season and adding new sponsors. The Netflix series ‘Formula 1: Drive to Survive’ was well received by existing and new fans and created excitement for the launch of the 2019 season in March.”
• The McLaren Formula 1 team has appointed Mark Waller, a long-time senior executive at the NFL, as managing director of sales and marketing.
In the newly-created role, the Briton will oversee all aspects of UK-based McLaren Racing’s commercial and marketing activity, reporting to the company’s chief executive Zak Brown.
This will include developing the famous McLaren brand and attracting new sponsors.
Waller was until recently the head of international at the NFL, a position he took up ahead of the 2014 season. He joined the league, from international drinks giant Diageo, as a senior vice-president in 2006, and stepped up to chief marketing officer in 2009.
Brown said on Friday: “Securing Mark in this new role is another important step in our long-term plan and I’m pleased someone of Mark’s experience and stature has decided to come to McLaren. His energy, insight and imagination will contribute to McLaren staying at the forefront of the commercial and marketing landscape, not only in Formula 1 but also in sport, lifestyle and technology.”
Waller added: “The McLaren name is among the most powerful sports brands in the world, steeped in human endeavour, technology, innovation and creativity. Allied to the exciting evolution of Formula 1 as a modern global sports property and the long-term ambitions of McLaren, this was an opportunity I couldn’t refuse. I look forward to joining the team.”