Formula One announced last week that they will be launching a new F1 Esports Virtual Grand Prix series.
On Formula One’s official website, Julian Tan, Head of Digital Business Initiatives and Esports said,
“We are very pleased to be able to bring some light relief in the form of the F1 Esports Virtual GP, in these unpredictable times, as we hope to entertain fans missing the regular sporting action. With every major sports league in the world unable to compete, it is a great time to highlight the benefits of esports and the incredible skill that’s on show.”
The races will run in place of the every postponed Grand Prix and the inaugural Bahrain Virtual Grand Prix took place this last Sunday March 22, featuring a host of participants ranging from current F1 drivers to E-Sports athletes to commentators. The broadcast was available on Formula One’s Youtube channel, Facebook channel, Twitch, and the official Formula One website.
After a chaotic and entertaining race, the winner was Renault’s junior driver Guanyu Zhou. While the result did not contribute to any official points in the championship, given the current sports climate it is not hard to imagine that we are seeing a glimpse into the future. You could think of this as F1’s first serious experiment into adopting digital racing as a result of the coronavirus.
Zooming out to a larger scale, let’s think about how this could work on a more permanent, ongoing basis. One of the reasons a city agrees to host a Formula One Grand Prix is because of the economic benefits it gives to their city and country. A sponsor is hoping to get a certain amount of global eyeballs and exposure. Can Formula One, their host cities and their sponsors benefit from a forced move to Esports?
An interesting question to ponder is how could Formula One better monetise their E-Sports. Could they transfer over their current sponsors to a digital offering? The banners and logos and placements on the virtual track could easily be programmed to display any company. You could probably even personalise the messaging based on where someone is streaming the virtual Formula One race. If I’m watching a virtual race from Malaysia, I could be served a targeted ad that’s different than my friend watching the same race from Vancouver.
Would current F1 TV broadcast partners accept a virtual race if they can’t show any physical ones in the near future? This Bahrain Virtual Grand Prix wasn’t broadcasted on TV, but if viewer numbers increase to a sizeable enough number, it can become an attractive enough property for TV channels to include in their programming. It’s super important that whoever runs Formula One’s digital marketing can drive up their Virtual Grand Prix video views across social channels like Youtube, Twitch, and Facebook. If F1 can increase viewership, they could make a stronger case to their sponsors to digitise their current agreements and generate more revenue.
Every single sport needs to grapple with how they deal with the coronavirus, as the most obvious challenge now is lost revenue from cancelling physical events. While each sport and team will be affected in different ways, they all need to seriously considering their virtual options and act now.
In the war rooms of each major sports league, I’m imagining sports veterans huddled over some kind of emergency plan. The NBA must be seriously looking into NBA 2K20 esports games. The NFL must be seriously looking into Madden. Tour De France must be looking into virtual cycling platform Zwift.
Thinking in the shoes of the F1, the Esports angle of hosting virtual races is a great way to test out new business models. They hedge their bets by branding this as more of a casual entertainment test, while internally I’m sure they are panicking about the financial hit that comes from postponing all the official races. Virtual events are a good sandbox to try new forms of monetisation while the sports world is still reeling from the coronavirus.
F1 has cancelled the Australian Grand Prix, the Bahrain Grand Prix (scheduled for last weekend) and the subsequent five races in Vietnam, Holland, Spain, Monaco, and Azerbaijan. As of March 23, the June 7 Azerbaijan Grand Prix was the last to be postponed and Formula One CEO Chase Carey was quoted as saying “We recognise there is significant potential for additional postponements in currently scheduled events, nonetheless we and our partners fully expect the season to start at some point this summer, with a revised calendar of between 15–18 races.”
Reading between the lines, Formula One needs to take drastic action. This coronavirus has brought all traditional sports business models into question and innovation is now a matter of survival.
When the virtual GP was first announced last week, a disclaimer on the official F1 website said “The F1 Esports Virtual GP Initiative will be extended beyond May if the coronavirus pandemic results in further Grand Prix cancellations/postponements.” With another virtual Grand Prix in two weeks, we can only imagine how this might become a new normal…