Business of Speed

The Money Behind the Motorsports Industry

By: Tim Frost

Date: March 1, 2019

The media landscape surrounding the motorsports industry continues to evolve.

As the racing season gets underway there is anticipation about the future and the challenges ahead. The rapid development of technology is no longer limited to competition on the track. It is being deployed at the track to bring action to those not in attendance.

This new technology is creating opportunities for Over-The-Top (OTT) platforms in sports broadcasting. Traditional business models are no longer the norm. Automated production solutions enable smaller sports properties to create content at a lower cost and stream them on their own or third party platforms.

Offering fans shareable or editable content creates an interactive viewing experience. Different from traditional broadcasts, it has resulted in a large increase in fan engagement.

Streaming video provides younger fans a familiar mobile format and portability.

Broadcasters continue to pay record amounts for live sports programming. However, they are reaching fewer fans on traditional television. Simultaneously, more people are watching on various OTT platforms. The value of digital rights are increasing as more content becomes available and the quality of that content improves.

The ratings for traditional sports broadcasts are trending downward. Most agencies are still spending advertising dollars but directing a larger percentage towards digital. Calculating the ROI based on household viewership can be challenging.

Developing a model which includes digital viewership is underway. The key to adoption is solid methodology and acceptance by key stakeholders.

The media rights of top tier leagues remain in high demand due to their live event programming and desirable viewer demographics.

Lower-level series are utilizing OTT to gain more exposure and sponsorship.

Supported by technology and automation, the production value is a near broadcast quality experience. Fans create video clips that can be viewed repeatedly and shared on social media. Metrics are showing an increased viewership on social channels.

There could be a complete change in sports broadcasting.

To compete in a cord-cutting environment, properties will have to add streaming to their offerings. The goal will be to build a diverse, personalized subscription options, combining traditional broadcast and OTT products.

Fans will be willing to pay for the content they want. They will stay away from the bundled suite of sports programming they will not watch.

The disruptive nature of broadcast technology allows entities to offer direct-to-consumer live platforms. They also become broadcaster and operator. An increasing number of viewers are transitioning to digital watching.

Historically, the cost to produce an event was prohibitive. High definition cameras are a fraction of the price. Fiber optic cable and high speed internet has created a realistic alternative to a full scale on-site mobile production studios.

Broadcast talent with an “authentic” appeal reasonates with the viewers. Knowledge of the sport and respect with drivers enhances the viewership experience.

Motorsports is prominent in the OTT marketplace. The large number of venue and races allows for creation of large amounts of content.

The decentralized nature of the industry and niche fan base makes the sport desirable for this type of media deployment. Traditional coverage was limited with inconvenient viewing times. Diminished visibility did not enhance the sponsorship sales process.

The business model for sports programming continues to evolve. Historically content was purchased through distributors (cable companies). Direct to consumers is taking hold as viewers become comfortable dealing with the content producers.

They face competition from ad-supported networks, subscriber turnover, and new market entrants. By serving their subscriber base with relevant content, high production value and new format they will continue to succeed.

Subscription based packages for racing content is growing. Single event package for special events occurs, but consumers are showing a willingness to pay for access for the flexible of on-demand race content.

Race fans are dedicated and passionate. The ability to follow and watch anytime, anywhere on various platforms will keep them on track.