I think pay per view was always going to be the end game.

Pay-per-view online streaming? That almost sounds like a good idea...
But I do think it's funny that a smaller audience is considered to be a "good thing."

Sadly BazL, SKy aren't getting even close to 1mil viewers per race.
They're appear to be averaging at around 420,000-450,000 over the course of a GP.

Viewing figures on mobile and online devices do not count toward viewing figures.

Viewing figures are judged on live showings, repeats, DVR'd recordings for up to 7 days after the original broadcast...

...which brings us to less than half-a-million.

The inclusion of mobile / internet viewer numbers would need a rewrite of clauses in the TV licence contracts.
That will not happen until 2014 I believe.

Right now, broadcasts on mobile and internet devices are not covered by the TV licence, but expect that to change with the new licence document.

The £20-£35 pm (the lower rate is what it costs if you sign up for HD now, the higher if you signed before this month began) has to pay for the standard and entertainment content as well as the F1 content. Since Sky cannot guarantee how much viewers care about, say, Hawaii 5-0 or A League of Their Own* compared to F1 before they watch, it has to look at the comparitive figures for those programmes for its HD customers. Whatever proportion is spent watching F1 is the amount Sky can safely spend on F1.

For those of you wondering, BARB (which measures TV figures) reckons the Monaco GP got 565,000 Sky viewers on average (including delayed viewings on Sky+, but not highlights or scheduled repeats). Bahrain, which Sky had to itself, still only managed 819,000 viewers. No data is available for Spain from BARB, though given Monaco's popularity, Kate's quoted range makes sense. Note that all in-home platforms are included for viewing figures, provided they watched by the Sunday after the week of broadcast. People watching a Sunday race 8 or more days after it happens are never counted. Any viewing outside a home - be it on a mobile, in an internet café or at a pub - is ignored completely (so if 100 people watch F1 in a pub, they don't even count as the 1 viewer that could be inferred from the channel being tuned in). The BARB figures only care about residential viewing and to the best of my knowledge neither commercial nor "mobile" viewing is recorded (except for Sky Go, which is recorded by Sky for its internal reasons and not reported to the public).

I believe recordings are counted if and only if it was done through something like Sky+ or the channel also being watched at the time of recording - broadcasters can't track what happens to DVDs and the like, and systems capable of viewing and recording different channels simultaneously only report the channel viewed to the broadcaster.

Unlike the BBC, Sky counts all its viewers, so its figure is likely to be fairly close to the truth. BBC's has several ways to be "fudged" in both directions (partly due to sampling methods). However, if Virgin has a differently-branded channel for its redistribution of F1, the Virgin F1 figure would be counted separately.

Incidentally, a standard Sky subscription is £20 per month, so Sky's now having to pay for the HD encoding from elsewhere in the empire, let alone F1. Cutting the price that deeply indicates to me that Sky is way down on its viewer quota. Furthermore, the new campaign doesn't include F1, despite showing many of the other sports Sky will have in the three-month duration of the offer - implying the F1 method didn't work for gaining (enough) viewers. Hardly the environment in which further investment in British F1 rights from it are likely.

The F1 coverage is now relying on ads to make any money at all due to the low amount that can be depended upon per subscription. That would explain why there is talk of more ads in the air, and why Bernie is talking up Sky. The more I look at the situation, the more I see desperation to make a dual-broadcast system work in the UK. Otherwise the BBC has lost one more bidding rival (and arguably its most dangerous) to its long-term bargain-basement reacquisition of the entire set of British F1 rights.

Sky Germany negotiates separately to Sky Britain because it managed to get a massive discount this year (unique for Bernie v TV broadcaster duels) and Sky Britain did not.

(Sky Italia's budget is largely separate, so different concerns may apply there).

* - Both of those programmes, along with Bones, Touch and four football shows, beat Bahrain in terms of Sky's own viewing figures for April 16-22. Note that the football shows require extra subscriptions on top of F1 and the other three are all accessible to people with the F1 subscription. Apart from the football, it is extremely unlikely any of those shows charge Sky £40 m per year for transmission rights...

Optimaximal said:
"A HD sub costs ~£30-35 pcm, which means that two F1 races is theoretically bringing Sky £13 million per month before costs."
Surely that's only true if all the viewers who contributed that £13m were new customers drawn to SKY just for F1.
What about all the existing HD subscribers or Sports package subscribers who were already paying before the shared rights model took effect?
What we really need to know is, how many new subscribers of HD/Sports did SKY gain in the first couple of months after their F1 channel launched.
Half a million viewers per race might only be 100-200k new subscribers in reality.
I'm resigned to losing FTA coverage for at least the next decade and it will be interesting to see if F1's appeal can weather the fall off in viewers.
The Italian SKY deal, whilst bad for our Italian cousins, could actually turn out to be a good thing for British F1 fans. If it accelerates the viewing figures decline (that this model produces) in a second key market, then the commercial pressure from within to fix the situation will surely grow at the same speed.