FEBRUARY 12, 2002
The future revenues of Formula 1
One problem which is currently not being addressed by F1 is the fact that TV revenues are going to drop in the years ahead.
Sport is having to compete for viewers like never before and the only way to fight this trend and keep the viewers is to take control of TV production to ensure that the programs broadcast are of a consistent high quality. Formula 1 has done this for its pay-per-view service but the free-over-air programming remains relatively weak. Without the viewing figures the TV companies cannot attract advertising and so cannot pay the rights fees being demanded. Pay-per-view TV has been a major disaster for most of the companies involved although it is beginning to work when they offer big packages at reasonable rates. Trying to charge high rates for specific sports is not viable.
The best way to move forward appears to be to improve the product using new technology. Formula 1 has embarked on this path but only with the pay-per-view feed produced by the Formula One group. Rallying has found that advanced computer games can be a great communication tool for the sport and are now attracting viewers who would otherwise have had no interest in rallying.
There is general resistance to the Internet as no-one seems to have yet worked out how to make money. Subscription Internet sites are not successful to be able to replace TV incomes but at the same time the television and the Internet are moving towards some from of technical "merger" in the future which will be a massive challenge for the rights holders.
Maintaining TV revenues and harnessing the Internet are the issues of the moment.