For a company that openly admits it does not do things by halves, Apple’s arrival this year as Formula 1’s American broadcaster was viewed as the first step in wider global ambitions.
After all, with an omni-presence around the world allied to an ambitious company mindset, there was some logic towards both Apple and F1 embarking on a path that expanded far beyond the United States coastline.
As Apple’s Eddy Cue, senior vice president of services who leads its F1 activities, told Reuters in Miami: “Do I hope that we are able to grow into other areas and markets? Yeah, I do.”
All that seemed missing was a bit of time for current contracts in other countries to come up for grabs – and then the door would be open for Apple to step in and start widening its influence…
The suggestion of a global deal happening any time soon fell away this week, though, with the announcement of a new TV deal between F1 and Sky until 2034.
That long-term lock up (in Italy until 2032 and UK/Ireland until 2034) has shed a light on what the priorities are when it comes to F1 finding the right broadcast partners.
What was most fascinating about the Sky deal was not its size – believed to be worth around $1.35 billion over five years – but instead that it was completed with three years still to run on the current arrangement.
This was far from the kind of last-minute bidding war timeframe that some may think is the best approach if the ultimate ambition is about simply getting the biggest cheque in the bank.
Instead, while the Sky deal is a big one and could almost certainly have been matched by Apple – which is believed to have paid $750 million for its five-year US contract – there are other important factors in play that go beyond the bottom line.
The value of committing early
One of the tactics that F1 CEO Stefano Domenicali and Liberty Media have pursued since being in charge of F1 is to commit early to deals – be it with sponsors, race venues or TV companies.
While holding out until the last minute and playing interested parties off each other can be used to up the price in the end, there are bigger-picture benefits that come into play when going early with established parties.
There is no better example than what happens with race promoters.
With a queue of countries lined up wanting to host races, F1 could play venues off against each other to go with the biggest cash deal on offer.
But this ends up being a short-term tactic because tracks only then think of getting the next deal over the line – rather than creating the best event for the long term.
Instead, handing long-term contracts to established race promoters gives them the security needed to make the kind of major investments needed – like new pit buildings, hospitality areas or circuit infrastructure – that elevate the experience for fans, guests and teams.
This same go-early policy applies just as much to TV contracts – because in doing the deal with Sky now, F1 knows that investments the broadcaster makes today will bring gains over many years.
The alternative of no security would be a Sky not wanting to push on with doing things better or spending money to elevate the watching experience for its subscribers.
As Liberty CEO Derek Chang said during a Liberty Media investors’ call this week: “What we’re really asking a lot of these guys to do, as they partner with us, is to invest in the product.
“In order to do that, you want them sort of confident with the relationship and where things are going to be on a longer-term basis. So sometimes we are entering into these discussions early to facilitate exactly that.
“As these guys continue to work with us to build, sort of, the next gen of what the viewing experience is like, it’s on both of us to walk up in a manner like this.”
Different markets
F1 has never done a global deal for coverage because it understands well that the requirements of individual markets can vary so much.
What works in one region does not fit another, and F1 has been very good at being agile in moving with the times and having agreements that suit best.
One of the key considerations right now is how people are consuming content – and there is a market transition going on between linear channels and streaming.
In America, streaming is accepted much more than in Europe for the demographic F1 is chasing – which is why the Apple deal was so important.
But things are different in Europe, where network channels like Sky retain huge influence and audience.
As Domenicali said: “We have the privilege of being a worldwide sport, where we can really understand where the shifting between traditional broadcast versus streaming is moving.
“We do believe that in the market that we have signed the deal, as an extended agreement with Sky, it will be the best, even medium-, long-term.”
It must not be forgotten, too, that Sky has huge experience of F1, and its broadcasts are taken by Apple – which is just starting its journey. Having this mixture of youth and experience means two big broadcasters bring benefits to the F1 ecosystem.
An Apple deal also probably works better in the USA than Europe right now because the company is much more ingrained there.
As Chang admitted, new deals come with the danger of losing those who have loyally followed things somewhere else.
“Anytime you change broadcast partners, you always run the risk of having a lot of fan outlash that they can’t find it, or things like that, or it’s not as good,” he said.
“We haven’t had any of that – in fact, it has been to the positive in terms of how consumers have been interacting with the product.”
The element of competition
F1 thrives on competition, and it’s what helps teams and drivers to get the very best out of themselves.
The same is true off track, and it is fair to say that F1 is not blind to the fact that having a host of different broadcasters under its umbrella can help push everyone on as they try to set the benchmark.
It means no complacency from a single channel that has a monopoly, plus any technology advancement made by one can be shared around the ecosystem to make things better.
One of Apple’s early ambitions is to raise the sophistications of F1’s offering – which means higher-quality broadcasts, innovations in what is offered to fans and a wider offering on different touch points.
This is something that Chang has referenced: “Our partnership with Apple and its tech-forward platform is already delivering early innovative enhancements to our F1 product, with multi-view data feeds and onboard features, creating a more engaging viewing experience for our fans.”
The multi-view aspect, for example, is something Apple has successfully rolled out and that could lay the ground for it to be adopted elsewhere – including Sky.
Audience behaviour
It is fair to say that one of the aims for F1 with the Apple deal is to open the series to a new wave of fans in the United States.
In one way, this is achieved through the numbers that actually subscribe and watch.
The technology company’s policy of not releasing viewership figures has inevitably prompted intrigue about the American audience being lower than expected after the move across from ESPN – but both F1 and Apple insist everything is on track.
Speaking at the Autosport Business Exchange in Miami, Cue said: “We are thrilled. The ratings were way up over where they were last year on linear for the first three races, significantly. Not only did we see more viewers, but we also saw more viewers throughout the weekend.”
Of note, too, is that early analysis points to the Apple coverage attracting a younger and more female audience – something that F1 in particular has chased.
As Domenicali said: “Our fan base is younger, and there are a lot of females, around 40% in the US. That’s why we do believe that Apple will guarantee to them a much more suitable way to live that experience.”
There are wider benefits to be had for F1 through Apple’s wider penetration of the US market.
Apple’s deal has triggered it to launch some prolific marketing campaigns to amplify F1 in the United States – including in its stores, on Apple Apps and with its own original programming, too.
It recently sold out shows of the Miami Grand Prix at its IMAX theatres, too.
It is the exact same gain that F1 gets from Sky – which is one of the few broadcasters in the UK and Europe that has the financial might to go big on promoting its coverage, which only further helps to promote grand prix racing itself.
A train journey anywhere around the UK will highlight countless F1-branded Sky billboards at stations that are all ramming home its coverage – and raising awareness of the ongoing season.
For F1, with both Apple and Sky, it is very much about picking the right partner for the right place. It is not a one-size-fits-all situation.