(Welcome to the Entertainment Strategy Guy, a newsletter on the entertainment industry and business strategy. I write a weekly Streaming Ratings Report and a bi-weekly strategy column, along with occasional deep dives into other topics, like today’s article. Please subscribe.)
I try to avoid hitting the same topics over and over again in this newsletter, or at least that’s the goal. Reading other newsletters, even some of my favorite columnists can wind up repeating the same points over and over again. (Or repeating the same charts. That’s a particular bugaboo of mine, but I get it: making charts is hard! Still, at the very least, update your charts!)
Because of that, I don’t want to sound like a broken record (like discussing the theatrical versus streaming debate too many times). Luckily for me, all the new streaming shows that come out each week (and their viewership data) provide me with a steady flow of new topics.
All that said, today, it’s time for my yearly article/update on the topic of Formula 1‘s increased viewership since 2019 and Netflix’s overhyped role in that increase. (Once a year isn’t too often to cover Formula 1, is it?) You might be thinking, “Hey EntStrategyGuy, why do you keep banging on this drum? Hasn’t the point been made?”
Not quite. Just back in February, the “paper of record”, The New York Times (technically The Athletic), wrote that “F1 has enjoyed a surge in popularity in the United States in recent years, in part thanks to the success of the Netflix docu-series “Drive to Survive” that debuted in 2019,” in this article:
How’s that bid going? Well, let’s head over to the conservative paper record, The Wall Street Journal, just a few weeks ago:
I keep writing about both Formula 1 and Formula 1: Drive to Survive because the hype never matches the reality. Check out that subheader…the viewership is growing anymore. And they wrote, “‘Netflix’s “Drive to Survive’ documentary series helped catapult F1’s popularity in the U.S.”
This year, the hype crashed straight into reality when actual money was on the line, which might come as a shock to many people reading traditional news outlets. (But not my longtime readers.)
So it’s time for my yearly Formula 1 check-in. But wait, there’s more! This year, looking at Formula 1’s media rights deal, I was inspired to look at the WNBA’s media rights deal…and yeesh, if I played in the WNBA, I wouldn’t be happy.
Why Formula 1 Can’t Get a Deal: Low Viewership
If you’re trying to discern what’s hype versus what’s real, very often, you should use the Jerry Maguire principle:
Right now, no one is showing Formula 1 the money. Specifically, Formula 1 is seeking $150 to $180 in annual pay for their next media rights deal in America, and no buyer—including ESPN—has stepped up to pay. (Yet. Who knows, within days of publishing, they could make a deal.)
Sometimes, the simplest explanation is best: Formula 1 isn’t getting the offers that it wants because its ratings are…
- Low, averaging 1.1 million viewers per race in America.
- Flat, if not going down, for the last three years.
Let me update the chart as I do every year.
(Reminder: I focus on US ratings, which makes sense for this article, because Formula 1 is selling its US-only TV rights right now. That said, circa 2021, Formula 1 used to publish their global ratings data annually via their press office. Then they stopped a couple of years ago. Hmmm…)
Remember, reporters and analysts are constantly saying that “Netflix’ Drive to Survive made Formula 1 popular”, which ignores all the other factors that drove Formula 1’s popularity increase—like the races moving to ESPN, Liberty Media’s renewed PR push, putting more race in the US, and so on. One also has to explain why the effect of Formula 1: Drive to Survive took two years to take hold, as opposed to the move to ESPN (which took three) or Nielsen’s change in measurement…which happened the same year as the increase. After this year, you also have to explain why the ratings seemed to have flatlined over the last few years.
Plus, both IndyCar and NASCAR remain more popular than Formula 1 in the US.
Last year, I got a ton of feedback (from Formula 1 fans) that, of course, Formula 1 races get low ratings in the US; the races are on at horrible times! This feels a bit like cope, since none of these people “Well, actually” the NY Times or Wall Street Journal when they write that the sport has seen a huge boon in popularity, only me when I point out that the ratings aren’t great. But this is actually an excellent point:
Most Formula 1 races are on early Sunday mornings, and thus, its ratings will always struggle to compete with other American sports.
But it’s not just the races. Even Netflix’s Formula 1: Drive to Survive has hit a viewership wall. The latest season didn’t make the Nielsen, Luminate or Samba TV top ten charts in America. According to Netflix’s global charts, the series had 3.8 million views in its first week in the whole world, which…isn’t very good.
One final point. Blame social media for this disconnect, especially Twitter. I think a lot of journalists/writers/pundits/commentators are/were on Twitter, and a huge chunk of them are/were really into Formula 1, especially during Covid-19, so they think there’s this huge groundswell of fan interest in the sport. That bleeds into the mainstream media coverage of Formula 1. Especially last year, I could tell which articles were written by well-meaning reporters-cum-Formula 1 fans trying to explain how their favorite sport has seen a huge boom in popularity. And Formula 1/Liberty Media has no reason not to feed into this hype, so their PR teams supplied factoids and selective datapoints to journalists already hungry to convey that narrative.
Except reality exists. The hype can only last so long if you have to make money. And the proof is in the media rights deal pudding. If the sport actually were experiencing a huge surge in popularity, they’d have no problem getting more money.
We know what it looks like when a sports league pops. Cue Caitlin Clark and the WNBA.
Caitlin Clark is Still More Popular Than Formula 1
In last year’s article, I wrote the provocative sub-header: “Caitlin Clark is more popular than Formula 1”, showing that in just three (3!) NCAA games, she had more viewership than every Formula 1 race in 2023 (in terms of total hours watched). I used the same title as this article’s headline, since we can update that analysis just by looking at Caitlin Clark’s WNBA games in 2024 (40 regular season games, two playoff games, an all-star game, and the WNBA draft) compared to the entire Formula 1 season (24 races):
Caitlin Clark’s WNBA career drove over twice as much viewership (115.6 million hours) as Formula 1’s 2024 season in America last year (53 million).
You know me. I’m as skeptical about overhyped media sensations as anyone. Midway through the 2023-2024 NCAA season, I had my doubts about the Caitlin Clark phenomenon. But her monster NCAA ratings translated into monster WNBA viewership numbers as well; I don’t think there’s any room for skepticism.
Normally, my analysis would stop there…but then I remembered that the WNBA signed a new deal last summer, at the same time that the NBA re-upped its deal, and I said to myself, I said, “I wonder how the WNBA makes now compared to what Formula 1 wants…”
Let’s run that analysis!
Formula 1 vs. WNBA’s Media Rights Deal
According to the Wall Street Journal, Formula 1 is currently seeking between $150 million and $180 million per year to broadcast Formula 1 in the US. How does that compare to what the WNBA is getting now?
- The WNBA just signed a new deal worth $200 million a year for 105 regular season games and 20 playoff games with NBCU, Disney and Prime Video. They have two other deals with CBS and ION Network that are also up for renegotiation, likely worth around $50 to 60 million.
- Formula 1 currently makes a reported $90-$100 million a year for 24 races. They want $150 to $180 million.
- Both events last approximately two hours, so there’s no difference there.
- The WNBA averaged 1.19 million viewers on ESPN, while Formula 1 races also averaged 1.106 million.
In other words, Formula 1 is asking for more money per event, while its ratings are basically the same, if not lower. (Technically, F1 has other auxiliary races like qualifying races, but my understanding is the ratings are even lower for those.)
If you look at all viewership across all networks, the gap is even more stark. In 2024, for a national media rights price tag of $50 million, the WNBA delivered (according to a press release) 136 million hours of viewership. That means their media partners paid just $0.37 for every hour viewed. For Formula 1? At $90 million a year, ESPN paid $1.70. Nearly five times as much!
Even with the WNBA’s rights increase going forward (and my understanding is this price won’t kick in until next year), the WNBA will still be a better deal than Formula 1. Even assuming the WNBA and Formula 1 both get about 10% viewership increases (up to 150 and 60 million hours respectively)—a beneficial assumption for F1, since it looks to be flatlining in America—and also that Formula 1 gets their new media rights deal, than the WNBA would go up to about $1.67 per hour viewed, while Formula 1 would go up to $3!
The NBA Comparison May Be Worse…
But that’s not the best comparison/worst disparity. You see, the NBA signed its deal last summer as well. Here’s what they’re getting per game:
Huh. Seven times higher. So will the NBA deliver seven times the value? To be frank, I don’t have the NBA’s total viewership hours in 2024 (or previous years) to make an exact comparison. But some of the data is kinda yikes. Consider:
- The NBA, across ABC, ESPN and TNT, is averaging…1.5 million viewers per game.
- The WNBA games on ESPN averaged…1.1 million.
Now, the WNBA’s average game viewership is even lower, only 670K viewers per episode, but that includes games on the ION Network. Still, that’s almost half the viewership the NBA is averaging right now. Also, NBA games are about 20 minutes longer, which means more ad inventory for partners to sell. Plus, the NBA playoffs deliver absolutely massive viewership numbers; the NBA finals average 10 million viewers per game, compared to 1.6 million for the WNBA’s finals last year. That means the NBA Finals alone can generate 40 to 70 million hours of viewership, or one-third of the WNBA’s entire viewership.
Of course, it’s not like the trend lines for the NBA are great:
Almost no matter how it’s calculated, the women of the WNBA—post-Caitlyn Clark, Angel Reese, Paige Bueckers this year, and Juju Watkins next year—are SEVERELY underpaid.
Takeaways
What’s the takeaway? For one, the NBA deal looks absolutely gigantic…or it looks like a gigantic overpay if viewership keeps declining. That’s really the key factor: essentially, in these giant sports deals, the network is paying for a certain set of viewers to keep tuning in, which keeps folks paying for either cable or streaming, which means more ad dollars.
If the NBA’s viewership doesn’t increase significantly over the next few years, that massive new media rights deal looks increasingly tenuous since what they’re paying for those rights will be going up significantly. Rival streamers/networks can find deals for sports leagues that deliver nearly the same viewership for a fraction of the price.
Thus, I remain skeptical that Formula 1 can/should get a huge pay raise. Just because the NBA got too much money doesn’t mean Formula 1 should as well.
Meanwhile, that WNBA deal just looks atrocious. It’s a huge underpay that depends on WNBA viewership regressing to pre-Caitlyn Clark numbers. But all the signs show that that’s happening to the NBA right now, not the WNBA.
Finally, all of this is a bit TBD. We’re waiting on a number of sports leagues (MLB, Formula 1, UFC) to sign new deals with ESPN or find a new home. The narrative hasn’t taken hold quite yet that sports rights deals might be on the decline, mainly because of the NBA’s mega-deal last summer.
I can’t wait to see what happens, and if that narrative changes.
