F1 audiences are declining worldwide

During the 2009 season, marked by Lewis Hamilton’s championship win, 600 million viewers watched at least 15 minutes of a Grand Prix. The following year, the audience experienced a severe drop, down to around 520 million viewers. It seems that the audience continued its slow decline during the 2012 season, despite it being one of the most thrilling in many years, as it reached slightly over 500 million viewers compared to 515 million the previous season.

However, the situation is not the same in all countries. The country with the highest number of spectators is Brazil. The number of fans there has increased by 8.9%, reaching 85.6 million viewers. This country alone represents 17% of the global audience even though it now has only one driver and one Grand Prix. The vast majority of the races, however, take place at times that are not ideal for the largest country in South America.

Similarly, among the progressions compared to 2011, we can note the presence of Italy and Spain, which have progressed by 15% and 11.5% respectively. These progressions are certainly due to the strong performances displayed by Fernando Alonso in his Ferrari.

Conversely, significant markets have experienced substantial declines. One of the main ones is China, which has seen a drop of more than a third in its viewership, falling from 74.5 million to just 48.9 million viewers. One of the main reasons for this decline is that many Asian races take place in the evening to cater to European audiences, the historical market for F1. The downside is that this puts F1 in competition with other even more popular sports within the Middle Kingdom, such as snooker or badminton.

Another key emerging market for F1 is Russia, the largest European automotive market. In 2012, F1 had a team (Marussia) and a driver (Vitaly Petrov) from Russia, with the prospect of hosting a race in 2014 in Sochi. However, Petrov’s move from Lotus to Caterham resulted in a noticeable drop in his performance (he was unable to score any points compared to a podium finish in 2011). This created a certain loss of interest among the Russian public, with a 12.8% drop in viewership.

Another disappointment for the F1 leaders and teams: the United States. Despite a successful return to Austin, it wasn’t enough to create strong enthusiasm among American viewers, who have many other choices. F1 thus lost 10% of its audience, reaching 9.7 million viewers over the entire season.

Another interesting country is the United Kingdom. Indeed, 2012 was the first season of sharing between the pay channel Sky Sports F1 (entire season) and the public channel BBC One (10 races). The loss of audience is undeniable, with 3.8 million viewers leaving their screens during the season, leaving “only” 28.6 million. This could give an idea of the audience losses to expect in the French market, which will switch from 100% free to 100% paid with the agreement between the FOM and Canal+.

Nevertheless, this drop in audience is not insignificant for the teams as it undeniably affects the figures presented in negotiations with potential sponsors. Eric Boullier, the director of Lotus, says the same thing: « We are closely following the new strategy of moving to pay TV. This may increase the socio-professional category and education level of our audience, but we may have to revise our sponsorship figures if the trend becomes global. »

However, the arrival of pay television can also lead to an increase in television rights, as has been the case in England for both F1 and the Premier League. The Concorde Agreements provide for a distribution of F1 profits: the higher the television rights, the higher the teams’ revenues. This could therefore reduce the weight of sponsorship in the teams’ budgets, which currently averages 42%. Teams would then be less dependent on their negotiations with sponsors.

However, the arrival of a pay channel does not necessarily translate into a financial boon for F1, as shown by the agreement with Canal+: the encrypted channel will pay 29 million euros in 2013, whereas TF1 had paid 31 million euros for the 2012 season. This can thus create a lose-lose situation for F1 and the teams: lower audience (therefore less sponsorship) and lower broadcasting rights (therefore less profit to share).

It is precisely for this reason that Bernie Ecclestone always wished to prioritize free-to-air broadcasting solutions… He now seems to assume that content offered by a channel accustomed to broadcasting major events can attract new followers, which could positively influence the image of F1. In which case, sponsors might want to be even more present in this sport. But in constantly seeking more funds from his different partners, has he reached a point where his demands are too high for traditional broadcasters in these times of prolonged economic crisis? The failure of negotiations for the 20th race of the 2013 season might be the beginning of the answer…

With the participation of www.racingbusiness.fr