The announcement of a deal between the Formula One group and Tata Communications some months ago has led to discussions about the possibilities of Formula 1 using direct delivery for its TV feeds over the internet.
The world's data transfer capabilities are increasing all the time. The global fibre optic network is now capable of shifting one terabit per second (one million million bytes) through hundreds of thousands of kilometres of fibre optic cable, creating spectacular new opportunities for the sport.
There is still resistance to pay-per-view sport in some markets, notably in Europe, but increasingly people are accepting that they must pay for cable and satellite subscriptions to watch their favourite sports, although the cost of these can be prohibitive for some fans. This is largely because the cable or satellite company is taking the money and using the sport to attract new customers.
If a sport goes directly to the fans, there will be no middle man, and no need to exploit in the same way as is happening at the moment. Such a system would allow viewers to pay, for example, £5 for each race. At the moment F1's live audience is about 300 million around the world; not everyone will sign up to such a system but the potential is clearly there.
If one employs some fairly rudimentary mathematics, the potential is obvious – and rather enticing. If a third of the current 300 million live viewers of F1 were to switch to direct internet TV viewing, it would generate £10 billion in the course of a 20-race Formula 1 season. In other words, about 10 times the current revenues from TV companies…
And, of course, such a course of action would be involving only one third of the audience, and more would likely follow if it worked and cut the cost of their viewing.
In the overall scheme of things this would be sufficient for the teams. They get around half of the money generated and so would receive 10 times more than they currently are. If that affects their sponsorship revenues they are not going to be too bothered. There will still be potential for sponsorships, but at more cost-effective rates, so there would be more potential sponsors, too.