Motorsport Games Might Not See the End of 2023, Tries Selling NASCAR License

Motorsport Games Q2 Earnings Report.jpg
The reports are in, and they do not look optimistic: Motorsport Games has made its Q2 2023 Earnings Report public, which presents a bleak outlook on the company's future. MSG might not even see the end of the year - what does that mean for the licenses of racing series it holds?

Image credit: Motorsport Games

As Motorsport Games is listed on the NASDAQ, the company is required to publish reports about its finances for each quarter of a year. Naturally, this contains good amounts of complicated financial terms and legalese phrases - we want to spare you these, but if you are interested to read everything in detail, you can find the full report on the Motorsport Games investor relations website.

CEO Stephen Hood highlighted positive events of Q2 2023, such as the announcement of Le Mans Ultimate and key updates to rFactor 2. Suprisingly, the Next Gen Car Update DLC for NASCAR Heat 5 was also mentioned as a highlight due to it being "on track to become our most downloaded content update" - which is surprising, considering that Heat 5 is the predecessor to NASCAR 21: Ignition. The latter saw an issue-filled launch in late 2021, and the Next Gen Car DLC has been received overwhelmingly negative with users reporting the update to remove features or not work at all.

NASCAR Heat 5 Next Gen Car DLC Motorsport Games.jpg

The Next Gen Car Update DLC for NASCAR Heat 5 was received overwhelmingly negative. Image credit: Motorsport Games/704 Games Company

Will MSG See the End of the Year?​

The most interesting part of the Q2 report, however, is the Cash Flow and Liquidity section. These are the key statements of the report, informing about losses of $8.9 million in the first six months of 2023, leaving the company with "cash and cash equivalents" of $2 million as of June 30th - which have been further reduced by $1.4 million as of July 31st.

As a result, "the Company does not believe it has sufficient cash on hand to fund its operations for the remainder of the fiscal year 2023 and that additional funding will be required in order to continue operations". Options like equity or debt financing arrangements, selling licenses or company assets and "further cost reduction and restructuring initiatives" are being explored, according to the report.

Motorsport Games IndyCar Game Alex Palou Chip Ganassi Racing.jpg

A dedicated IndyCar game is among MSG's projects - will it ever see the light of day? Image credit: Motorsport Games

As was rumored recently, the NASCAR license is most likely on its way out from Motorsport Games - the company's most recent filing with the Securities and Exchange Commission (SEC) all but confirms this. The sale of the NASCAR license is mentioned as one of the ways to reduce the financial problems the company is facing, and MSG is "currently in discussions with a third-party for the potential sale of the NASCAR license". The document also confirms that the development of all potential future NASCAR games under Motorsport Games has been "put on hold indefinitely."

Since the problematic NASCAR 21: Ignition launch, Motorsport Games only released the Switch-exclusive NASCAR Rivals in 2022 using the license. Meanwhile, the planned-for 2022 BTCC game never materialized, with rFactor 2 seeing the release of BTCC DLC instead. rF2 and developer Studio 397 are part of Motorsport Games, hence the connection.

BTCC & IndyCar Games Doubtful​

The simulation's engine is also the framework for the upcoming Le Mans Ultimate, which is scheduled for release in December 2023. According to the SEC filings, Motorsport Games still expects this to happen, but crucially states that "the Company is evaluating its ability to deliver new titles under its other licenses, such as with INDYCAR and the British Touring Car Championship (the "BTCC"), which may result in further adjustments to the Company's product road map".

Le Mans Ultimate Porsche 963 Proton Competition Monza.jpg

Le Mans Ultimate is still expected to launch in December of 2023. Image credit: Motorsport Games

So, what does all of this mean, then? Briefly summarized, MSG expects Le Mans Ultimate to be released in December as originally planned, but with more pressing issues at hand, all other projects seem to be on hold indefinitely. The chances of an IndyCar or BTCC game seeing the light of day under Motorsport Games look to be rather slim, to put it mildly.

More Licenses to Move?​

Could these projects still be realized eventually? It is certainly possible if other companies step in and purchase the relevant assets - the question is if anyone would be willing to do so. Should MSG be able to complete the sale of the NASCAR license, it might give the company enough of a boost to at least survive the rest of 2023 and release Le Mans Ultimate as planned.

Licenses Held by Motorsport Games​

Series & Events
  • NASCAR
  • IndyCar
  • World Endurance Championship/24 Hours of Le Mans
  • British Touring Car Championship (BTCC)
Games
  • rFactor 2
  • KartKraft

What if the company goes bust before then, though? While this might delay LMU, it is hard to imagine Studio 397, the Le Mans Ultimate project and rFactor 2, which it is based on, not getting picked up by another party. The respective series might also terminate the licensing agreements - which could open the door for the return of the iRacing Indy 500 special event, for example. The race had to be left off the calendar for 2023 due to the exclusive license being with Motorsport Games. Meanwhile, Reiza Studios had to resort to a semi-fictional version of a 2023 IndyCar for Automobilista 2 instead of being able to license an actual Dallara IR-18.

Your Thoughts​

What do you make of the latest developments surrounding Motorsport Games? Let us know in the comments below!
About author
Yannik Haustein
Lifelong motorsport enthusiast and sim racing aficionado, walking racing history encyclopedia.

Sim racing editor, streamer and one half of the SimRacing Buddies podcast (warning, German!).

Heel & Toe Gang 4 life :D

Comments

Premium
With the change in leadership at MSG it would seem some common sense is prevailing. I hope they turn things around, but also work with the series owners to allow things like Indycar to exist on other platforms.

The tight licensing of these series is a detriment to sim racing as a whole.
 
I'm not terribly optimistic. Everything I've ever seen on Motorsports Game seems incredibly shady, and people like that always have a backup plan. It'll be interesting to see if the licenses for IPs like rFactor 2 and Kartcraft suddenly end up in the hands of a previously unknown publisher whose leadership hierarchy is conveniently composed of many of the same people currently running Motorsports Games.
 
I'm not terribly optimistic. Everything I've ever seen on Motorsports Game seems incredibly shady, and people like that always have a backup plan. It'll be interesting to see if the licenses for IPs like rFactor 2 and Kartcraft suddenly end up in the hands of a previously unknown publisher whose leadership hierarchy is conveniently composed of many of the same people currently running Motorsports Games.
True, but looking at last year's finances, and now this for this year - their issue is paying the developers. Getting investment now I think would be a challenge, the competitive market is possibly hotter than it's ever been with new players like Rennsport and older re-entry from the likes of Straight4, it's a fabulous time to enjoy sim racing - but a terrible time to looking to challenge the market, especially with internal cost constraints.

I'm thinking we'd more likely see something like evolution studios insofar as the dev team gets swallowed up by a bigger player.

And in that, something like Microsoft and being serious about its Forza Motorsport (next one, not this one) could easily swallow the consumable chunks of RF2 (not sure that's good or bad actually, sounds terrible on the face of it). They'd be more likely to buy exclusive licenses though, Bethesda being a prime example of "we want exclusive!".
 
Just give the Indycar license to Reiza and they can do a complete season. * throws money at screen *
And here we go again. What makes people think that a studio like Reiza would start working on a full Indycar game all of a sudden if they never had the interest to begin with? They are fully invested on AMS2, haven't even been able to maintain their rF2 pack in a timely fashion and haven't even fleshed out the CART content that is in AMS2 right now. And from my persepctive that's an area where they really could offer something that they are good at and that's unique. There are tons of great tracks for mid 90s CART like Surfers Paradise, Belle Isle, Toronto or Mid Ohio that aren't in the sim yet. Let's face it, they are busy with Le Mans and sportscar content next to Rallye Cross. Why would this be the right time to start an Indycar game?
 
Exclusivity deals are terrible for the consumer... You get one option... That's it... If it's terrible there's no where else to go...

But we've seen this before... All it takes is one rich person looking for a tax break business and this will be kept afloat for a few more months/years until the next cash injection is needed...

LMU has the right ingredients to be the place where I'll be running Le Mans races in 2024... At this point I don't have a reason to look elsewhere besides rF2 for Le Mans racing...
 

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