“Digital has become the free-to-air platform” | F1’s Frank Arthofer

• Virtual Grand Prix series helps to offer mainstream exposure for teams and sponsors during lockdown
• Series has made digital a cornerstone of its commercial development under ownership of Liberty Media
• Digital of increasing importance in engaging new audiences as F1 opts for pay-TV deals in key territories

Liberty Media’s major investment into Formula One’s digital media operations has demonstrated its value during sport’s global lockdown, believes Frank Arthofer, the series’ global head of digital media and licensing.

“The fundamental objective of our digital media business is to build audiences,” he tells SportBusiness, “and from that to develop various new commercial opportunities. Oftentimes in digital, those opportunities take longer to develop, you’re playing the long game a little bit.

“But in this case, with no races for four months, having that platform in place provided us with a great opportunity to service core partners on the media side, core partners on the sponsor side and, most importantly, the fans.”

F1’s digital operation is today a far cry from the situation Liberty found after completing its takeover of the motorracing series in 2017. F1 didn’t even have an official YouTube presence until 2015, and its teams and drivers were severely limited in what they were permitted to post to social media.

This year, after the Covid-19 pandemic caused the suspension of the F1 calendar in March, digital content became the series’ lifeline, with the creation of the successful Virtual Grand Prix series just one facet of a strategy that F1 claims has seen it rack up seven billion social media impressions, 111 million engagements and 680 million video views since the end of March.

In May alone, its YouTube channel attracted 67 million views, contributing to a 30-per-cent year-on-year increase in social media engagements. Of the major sports leagues with over five million followers, Arthofer says, none have grown faster over the past three years than F1.

Virtual racing drives lockdown engagement

“We had no races for almost four months,” says Arthofer, “and that means sponsors lose a lot of their inventory from a trackside perspective, it means the broadcasters don’t have the rights they typically have.”

While F1 is, like the rest of the sport world, still reeling from the impact of the pandemic, such a situation would have spelled disaster for the series just five years ago, when very little was in place to provide a safety net if live racing was unable to go ahead. In 2020, however, Arthofer was able to turn to the sport’s burgeoning esports operation to create the Esports Virtual Grand Prix series, which saw many of F1’s biggest names competing against each other on the F1 2020 video game, developed by Codemasters.

“Since we took over the business in 2017, esports has been a key component,” says Arthofer. “We launched a true esports series at that time with professional esports drivers competing, which itself has a pretty material and growing audience. But in the absence of real races, the Virtual Grand Prix series gave us an opportunity to put all ten teams ‘on the grid’, with the real drivers and some marquee celebrities – the likes of [One Direction member] Liam Payne – it’s clearly put virtual racing into a more public domain. And that benefits the core series, it benefits our esports series, and as a standalone proposition it presents opportunities as well.”

As well as being aired by many of F1’s traditional broadcast partners, the Virtual Grand Prix series was streamed on its official Facebook, Twitch and YouTube channels. Several of the drivers also provided alternative streams on their own Twitch profiles. After the series concluded in June, F1 reported that it had attracted a total of 30 million views across its various platforms – with, most pleasingly for Arthofer, 21.8 million of those coming via digital channels. His challenge now, he says, is determining where those views came from and, as he puts it, whether the series’ success was “content- or distribution-driven”.

“The demographics of digital channels, especially Twitch, are very different to the demographics that watched on our biggest broadcasters like Sky Sports or ESPN,” he says. “That might not be a particularly interesting insight, but it does help to reflect a diverse audience base, which is one of the things our digital strategy is supposed to achieve. We’ve seen younger endemic gamers flock to the product on streaming platforms, and we’ve seen a lot of traditional F1 fans flock to the product on broadcast platforms.”

Learning from necessity

Regular racing resumed in July with the Austrian Grand Prix, marking the end of F1’s enforced hiatus. Based on the social numbers and the response to the Virtual Grand Prix, the lockdown period can be judged as a successful one for the sport, says Arthofer, but the true test will be in how well it learns from and builds on that success.

The driver-led broadcasts on Twitch, in particular, are something Arthofer believes can be crucial to F1’s future digital strategy. The series has already begun exploring streams of its races on the platform, signing a deal for last year’s Mexican Grand Prix to be shown on Twitch in Germany, Switzerland, Luxembourg, Denmark, Norway and Sweden.

“Clearly these platforms have terrific scale, and I think the ability for fans to interact with the drivers on their streams alongside the traditional broadcast streams has been a real boon for us from a production perspective with the Virtual series,” Arthofer says. “We’re really working on thinking about how we pull back the proverbial visor and helmet and offer more insight into the personalities of the drivers, the trash talk, et cetera.”

Arthofer cites an instance during the Virtual Monaco Grand Prix, when a conversation between Red Bull’s Max Verstappen and McLaren’s Lando Norris went viral due to fans’ appreciation for the behind-the-scenes look at their friendship, as an example of Twitch streaming at its best.

“That’s gold. It shows these guys in the light they should be shown, and maybe in a way we’ve traditionally struggled with. They’re all real, interesting, authentic characters and we have a diverse set of drivers in terms of the markets and backgrounds that they come from. I think increasingly, younger fans especially are attracted to authenticity of character and big personalities, so it’s important for us to provide them with more access to that, which Twitch really enables.”

Furthermore, with F1 increasingly turning to pay-TV deals in many of its key territories – the sport is now behind a paywall in Italy, Germany and the UK, three traditional strongholds of motor racing – digital is growing further in importance not just as a tool for second-screen and auxiliary experiences for existing fans, but for making first contact with new audiences.

Arthofer argues that moving toward a model that prioritises high-value deals with subscription broadcasters – F1 more than doubled the value of its German rights when it signed an exclusive deal with Sky Deutschland earlier this year – is less of a risk in 2020 than it has been in the past, precisely because a majority of fans’ primary touchpoint with the sport is now digital rather than through linear broadcasts.

“We know that sports fans typically over-index on buying pay-TV,” he says. “We know that there are real, material numbers paying those subscriptions, so we don’t feel that the audience erosion is going to be as profound as it might have been 10 or 15 years ago.

“But another important aspect is that digital has become the free-to-air platform, in a sense. As we think about the ways that we interact with our audiences, the platforms are bound to change, and digital takes on a greater importance in reaching fans.

“We’ve almost quadrupled our social media followers since the beginning of 2017, and that’s almost entirely through organic social growth. We’ve doubled our video views each year, we’ve doubled the page views of F1.com and of our app each year. Equally, the market is changing, so I think the move to pay-TV in 2020 is different than the move to pay-TV might have been in 2005.”

Credible cross-promotion

Arthofer says F1 is now far more focused on creating a fan journey and transitioning potential fans from interest in one part of the sport to another, than it is on simply racking up broadcast figures, which represent just a part of the overall picture. Anecdotally, he says, F1 knows there are gamers who have played the Codemasters title and maybe even engaged with either of the esports products, for instance, but who have yet to become fully-fledged fans of the sport.

“Cross-promotion is a priority more generally, across the business, not just in digital. We’re still working with all of our various touch points, some of which we don’t fully own, like the game which is done under licensing, and determining how do we best optimise our audiences across each of those platforms and migrate them to different products at the right time?

“If there’s a gamer who’s watched a Virtual Grand Prix, how do we make sure we talk to that fan about the new game that is launching for 2020? How do we make sure we’re creating an opportunity to sell the game to that fan at the right time? How do we best optimise our audiences across each of those platforms and migrate them to different products at the right time?”

Arthofer cautions against an overly-aggressive approach in this regard, encouraging instead “a more organic way” of letting fans move between F1’s various verticals.

“Overtly asking people to try your product, try your sport, to some degree you immediately start to lose credibility. And that’s why our digital strategy is multi-faceted and why we’re prepared to be a little bit patient with it. If you imagine a fan who plays the video game and then spends some time watching [Ferrari driver] Charles Leclerc’s Twitch streams where he’s playing the game, and then that fan sees a post from Charles saying ‘headed to Austria for the first race of the season’, then hopefully that fan turns on the TV to watch the race.”

That, says Arthofer, is arguably the biggest change in strategy over the past three years. Long-term investment in social, particularly the teams’ and drivers’ social outlets, “wasn’t really part of the F1 corporate strategy” when Liberty took over. Now, he says, there is a much greater understanding of the “halo effect” of investing across the business, which ultimately achieves engagement with fans “in a much more credible way than the company of F1 directly saying to fans: ‘please tune in to the Austrian Grand Prix’,” he says.

“And I think that creates far greater brand credibility and equity with your fans.”