Increased streaming competition has hurt few companies as much as Netflix (NFLX 0.39%). Yet, while the company lost over a million subscribers in the first half of 2022, Netflix is still the most influential streaming service in the industry. Here's why.
The missing ingredient
Netflix released the documentary series Formula 1: Drive to Survive in March 2019 and has premiered new seasons of the show every year since. Each season consists of 10 episodes detailing the highs and lows of the Formula 1 (F1) racing season. The show's immense success has singlehandedly helped popularize a sport that has had trouble breaking into the U.S. market for decades.
Although Formula 1 has enjoyed high viewership abroad for over half a century, the sport has never caught on in the U.S., where NASCAR reigns supreme. The motorsport series has attempted to break into the U.S. numerous times, with American races held sporadically over the years. For instance, Formula 1 Grand Prix races were held in the U.S. from 1989 to 1991, but then no races took place in the country until 2000 as the sport's popularity remained dismal. Additionally, the U.S. recently missed out on hosting Formula 1 events from 2008 to 2011.
However, F1's popularity in the U.S. has risen significantly since the premiere of Netflix's Drive to Survive, with the company's influence seeming to be the missing ingredient the sport needed all along. The show's fourth season premiered in March and took the top spot for the most-watched show in the world with 29 million viewing hours. In addition to high viewing numbers for Netflix, the show's success has also led to a rise in U.S. viewership for F1 races. The 2021 season saw an average of 946,000 U.S. viewers per race, up 41% from 2019 -- the last normal season as 2020 was affected by COVID-19.
Netflix has had a lasting impact on Formula 1, with 2022 being the first year the U.S. held two of the season's races and the first time Miami hosted a Grand Prix, resulting in record attendance. The 2023 season will take that further by adding Las Vegas to the roster for the first time, with a record-breaking three races held in the U.S. in a single year.
Influencing the competition
While Netflix has helped boost the sport exponentially, its success with Drive to Survive has also affected the content lineup of its biggest competition. Streaming giants Apple (AAPL 0.74%), Disney (DIS 0.84%), and Amazon (AMZN 0.37%) have all recently released or announced projects themed as F1 in hopes of cashing in on the craze Netflix started.
Amazon launched its Prime Video docuseries Fernando in 2020, following the Formula 1 driver Fernando Alonso as he navigates the racing season; the show has received two seasons. Disney has also joined the competition by announcing an original Hulu series centered around F1 driver Daniel Ricciardo, easily the most-featured driver in Netflix's Drive to Survive and incredibly popular in the U.S. Another company to join the F1 takeover has been Apple, as it announced a Formula 1 film in the works starring Brad Pitt and a documentary following seven-time world champion Lewis Hamilton.
Few streaming companies have proven their power to influence the competition and pop culture like Netflix. Disney comes close with its push of the superhero genre, resulting in almost every streaming platform eventually offering a series based on a group of heroes. However, Disney grew Marvel into the juggernaut it is today with the help of comic characters that already had a fairly large fanbase. Netflix has proven a unique ability to grow brands with little to no fan bases and push them into the stratosphere. Its effect on Formula 1 is proof of that, along with the immense success of its original series, Stranger Things and Squid Game.
Utilizing its brands
In the future, Netflix will want to continue growing the content that has hit the hardest. For instance, if the company can offer more Formula 1 content for fans to turn to when they have finished the latest season of Drive to Survive, subscribers will be less likely to turn to the competition.
The company already has subsequent seasons of its biggest shows, Stranger Things and Squid Game, in the works, with the former even getting a spinoff show. The company is moving in the right direction, but subscriber retention will hang on what consumers watch once they complete the latest seasons of their favorite shows. Therefore, offering additional content in popular genres must be Netflix's focus with its upcoming content.