I completely agree that in the future (and it will probably take 7-10 years for infrastructure to be up to it) streaming will be primary means - but I dont think it will be free
Oh no, of course not. FOM need their monies, and I doubt Youtube adverts would quite cut it!
(Warning, drunkenmaster length of post)
There is the potential for them to lower prices per head if they are cutting out the likes of Sky and still make more money than they are currently, but I'd personally settle for not having to take out a full Sky Sports package just to watch live F1.
Currently, for someone without a Sky package and only going for the cheapest deal offered it would be £594 per year I think (I've not dug deeper and I'm sure there are cashback deals and things around).
Let's say FOM were to offer a yearly pass for £150 (£7 per weekend, so around NowTV day-only prices, and 21 races a season). We save £450 per year, and FOM get 100% (obviously minus the costs needed for the streaming infrastructure) of the money coming in.
Sky's exclusive deal is rumoured to be worth $150m per year (£115m today) to FOM. If FOM were to charge each UK viewer £150 per season then based on the 2016 total viewers, then that works out at £3.2
bn per year. Now obviously not all viewers would be prepared to fork out that much for a year's F1 and not all would want to watch all races, but even a quarter of that would be worth considerably more than Sky's deal, even when factoring in the cost of the streaming platform.
OK in other countries this may not work as well, and some countries are unlikely to even have the infrastructure to stream at all (indeed some parts of the UK still can't), but it's something they will be considering, potentially alongside a traditional TV highlights package.
This is all in laymans terms, doesn't cover taxes and is highly likely to have involved some poor maths on my part, but you can guarantee they'll be looking at the numbers and working out how to progress in the future. Other sports will be too.