Formula One (F1) is about to launch a channel on Amazon Prime. The channel, named F1 TV, has the potential to eventually attract 100 million people.
The channel is open to Amazon Prime members, but only in countries that don't have exclusive broadcast rights through new or re-contracts with F1. For example, in the United Kingdom, Sky has exclusive rights to broadcast, so it will not be distributed, but it is expected to be distributed in the United States. Murray Burnett, F1's Global Sponsorship and Commercial Director, said:
"It makes sense for F1 to join an open platform like Amazon Prime. We're already discussing what's coming with Amazon. In the US, OTT (Over the Top) is allowed under the contract with ESPN. And F1 will definitely join Amazon Prime in the US. "
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Benefits of each
Perhaps the negotiations between F1 and Amazon will be similar to the negotiations between Amazon and Eurosports executives. The company has already agreed to broadcast on Prime Video. If that happens, F1 TV will join the prime channel in a way that viewers pay for the channel they want to watch.
Toby Horalan, a senior analyst at media analysis firm Ampere Analysis, analyzes the partnership from an Amazon perspective: If F1 TV allows customers to pay multiple subscriptions in prime, they will be able to access more and more content from within a single interface, which can also help reduce churn from Amazon Prime.
Obtaining F1 TV subscribers and all the data that accompanies them is important for F1 to differentiate itself from other competitions. From the perspective of F1 broadcasters, you may think that the value of your rights will decline. Still, for F1, this is an opportunity to get to know consumers for the first time, and to build relationships with them for the first time.
Revenue sources other than TV
According to Mostin Goodwin, co-owner of OC & C Strategy Consultants, the risks for F1 are whether it can overcome the profitability issues of monthly flat-rate billing (SVOD) and make a profit, and broadcast. It is said that it is a strategy to establish a consumer business without offending each company with rights.
In existing markets such as the United Kingdom, the United States, and Germany, the number of households subscribing to multiple subscriptions is increasing, and when looking at households with video service subscription contracts, an average of two services are contracted per household. Is tied. According to Ampere Analysis, the number of contracts will rise to 2.8 in the United States alone.
"We want to make F1 TV the smartest channel in Amazon Prime," Burnett said. "F1 TV is a way to build direct relationships with fans. Until now, it could only be done through promoters and TV stations. F1 TV is an independent source of revenue outside of the relationship with the stations. I believe".
Fill the gap with the fans
It has been said that launching a subscription service by the right holder has a high risk in other sports such as soccer. This is because they have a contract with a broadcasting station that can make a high profit. But Barnett said, "The shape of sponsors in sports is changing and we're focusing on the brand's unique goals. Even in F1, we'll spend more time proposing and interacting with sponsors before signing a deal. It's no longer just showing sponsors the right to buy and a menu at that price. "
On top of that, this challenge will be an opportunity to appeal to potential new sponsors, especially consumer brands, that F1 is closer to its fans than ever before. After all, F1 has been a B2B business so far. Revenues came from major broadcasters, corporate sponsors and the government. That's why I didn't know much about the audience. Burnett says he has invested over the last 12 months to fill this gap in knowledge.
These strategies seem to have captured the hearts of Amazon executives. In early July, it was revealed that the AWS (Amazon Web Services) division would be the latest investor in F1. Mr. Burnett said that this is different from the traditional sponsorship agreement, and the investment was made between the two as much as F1 and Amazon tried to get the most out of their rights. It is revealed that it was because there was a common intention to create value by doing it. In response, Amazon is using its cloud computing software to display technical information about the car on the screen during the race, as well as making decades of data and content accessible to fans. ing.
Seb Joseph (Original / Translated by SI Japan)
