Motorsport Games Attempting to run NFT Scheme

By far the biggest story in sim racing right now.

Like many NASCAR fans, I have been left with infinitely more questions than answers regarding the abysmal state of NASCAR 21: Ignition. Based on my four years of experience in the sim racing industry I struggle to understand how this title passed certification, and how NASCAR didn't immediately distance themselves from Motorsport Games.

So I began searching for any info I could find on them. Everything I've found, is beyond bizarre and it feels like a fever dream.

Motorsport Games materialized in 2018, seemingly out of thin air, and somehow snatched up not one, but four major racing series licenses, along with the rights to established titles like rFactor 2 and KartKraft. This kind of aggressive expansion is completely unheard of in our hobby, and virtually impossible for a brand new development team who up until October of last year, hadn't released a game of their own.

Rather than engage with the sim community in the way guys like Aris, Ian Bell, et al. have done, they have curated their own little corner of the internet and essentially created their own separate ecosystem of pseudo-press.

Their CEO is obsessed with going on stock analyist shows like TD Ameritrade Network, or appearing as a guest speaker at investor conferences. I've never in my life had to watch stock analyitics shows of all things to learn basic info about a racing sim. The hosts are clueless about the quality of their games and ask him softball questions, seemingly oblivious to the fact that Motorsport Games released a defective product in NASCAR 21.

In the 15 months since going public, the share price has cratered from $30, to just $1.38, which flashes on the screen, yet the host continues to applaud him for "growth and success" as if they're not even talking about the same company.

The company seems to have no intention to communicate with the sim racing community at all - going as far as starting their own sim racing community, so that they can heavily curate the kinds of articles written about their games and keep investors from stumbling upon a place like RaceDepartment where people are asking serious questions. The site in question is called Traxion and is literally a carbon copy of RaceDepartment, albeit with the comments section very convoluted to find.

Taking things further, I've found a suspicious amount of stock analytics blogs writing that $MSGM is a buy, or the stock will recover from it's prolonged nosedive, only for virtually all of these predictions to be proven wrong.

In their most recent Q4 2021 earnings call, they admit to not having cash on-hand to last the calendar year, and are blowing through approximately $1.7mil per month. They will be out of money a few months prior to NASCAR 22 releasing, if that game actually happens.

The Le Mans game that was supposed to be in early access this year, has been postponed. The BTCC game, which was announced years ago and RaceDepartment lists as one of 10 racing sims to look forward to in 2022, has been taken off their road map entirely.

Yet this somehow all pales in comparison to what the company's actual business plan is.

Motorsport Games have a job opening for an NFT/Crypto specialist, and Kozko has spoken about the blockchain and "some surprises fans hopefully haven't been able to predict" in the above interview.

Their business plan, is to run an NFT scheme. This explains why NASCAR/Indy/BTCC/LeMans haven't jumped ship after it was clear NASCAR 21 was shovelware - the actual games don't matter; it's an avenue for these racing series to sell ovepriced, digital trading cards and get in on the NFT bubble, knowing niche racing sims alone won't make them any money. The games, which we thought were going to be niche racing sims for starved motorsports fanbases, are instead going to become macro-transaction hellscapes. We can only pray this doesn't filter over into rFactor 2.

They have held off announcing this publicly, since EA and Ubisoft have both backed away from NFT's due to player backlash & apathy, with Forbes even writing that interest in NFT's has died.

Furthermore, they appear to have been seriously dishonest when it comes to their dealings behind closed doors.

During their investor call, they have claimed 81 million fans followed the virtual Le Mans series, which is impossible. rFactor 2 is only played by about 900 people per day, with the most recent NFL Super Bowl reeling in 112 million viewers. They are seriously trying to claim rF2 is almost as big as the Super Bowl, attempting to obfuscate social media "impressions" (people scrolling past) with "actual viewers and fans of the product."

There is also a guy in my YouTube comments, who can be found on LinkedIn quite easily, that claimed MSGM came to his firm for financing and the firm basically laughed them out of the room, because their $400 mil valuation seemed completely bogus and the company had "virtually no revenue."

What in the actual hell is going on here?
Nice investigation, surely potential investors would do due diligence and find the same as you, or am I being naive.
Maybe greed trump's common sense.
Nice investigation, surely potential investors would do due diligence and find the same as you, or am I being naive.
Maybe greed trump's common sense.
Well... no.

I've followed the story of Theranos because there's an endless supply of podcasts and documentaries on it.

The scam worked because there was zero overlap between investors and medical industry professionals, therefore nobody who could adequately call BS.

I believe that's what's happening here. Nobody investing in Motorsport Games is a sim racer. Or a racing fan. Or even a gamer.

These people have no idea how to look up Steamcharts and see that rFactor 2 has just 900 players daily, and therefore it's impossible 81 million are watching an rFactor 2 eSports league. Which means nobody in the conference call can stand up and call Dmitry a f-cking liar to his face, or even understand why/how those metrics are misleading in the first place. They take what we all know to be absolute bogus, at face value.

These investors have no idea their licenses and partnerships, that supposedly add value to the company, are worthless. They have no idea NASCAR races in front of half-empty stands, as does IndyCar, and that many racing games on the market have these cars already in their game. If you want to race IndyCar - go pick up RaceRoom, iRacing, pCars2, or any other racing sim that has mod support. There is nothing special about $MSGM partnering with them, but investors don't know that.

The investors have no idea Traxion is a fake website, nor do they understand that something like RaceDepartment exists, or that there's a massive ecosystem of sim racers already in existence and therefore no reason to create their own - save for trying to control what is said about their products, which itself is a massive ethical issue. This is not "man with an independent blog works for company X and plays/comments on game Y in his free time." This is an entire operation set up, with several paid staff members, to make sure investors don't read RaceDepartment or find the "real" sim racing community. Which is just bizarre and insane.

These people have no idea that gamers have wholly rejected NFT's, because they have literally created their own social media platform in which they can conveniently not talk about their plans to implement NFT's in their games, and then show that to investors as "proof" that the community is onboard with it.

I am genuinely surprised they haven't been sued yet.
Watched the NFT video earlier today. Good research. Not surprising in anyway given what Ubisoft and others are doing.

I don't know if they're out to the destroy the sim racing world, maybe they're just trying something on the side like Ubisoft, but will be interesting to find out because the future of rFactor is at stake.
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Honestly I could not care, I told ISI 2 years in to early access gmotor3.0 starting from blank page, I would have paid for one car / track beta with servers for a couple years no worries
Anyway I have got my value out of rF2 tenfold over
Truthfully there is nothing to replace it for me so I think it is other studios not rF2's that need to catch up. I want a sim I can drive a few laps and go wow wow and forget rF2 ever existed
But when will that happen, never the way it is going
Yes I understand that part, but I'm surprised they don't check the financials, it took me less than 2 minutes to see the decline.
Whatever happens, good job in highlighting this, hopefully the word will spread.
I'm hopeful as well. Would you guys do an article on it? My content is always filled with too much s***s and f***s to be shared on more mainstream channels lol.
I'm not sure this forum is an appropriate place to disparage a studio, no matter what arguments one has (good or not).

Above all, you seem to be trolling in an ultra-intensive way rF2 and MG on a maximum of media.

Get out of your house, there's life outside of bashing.
I'm not sure this forum is an appropriate place to disparage a studio, no matter what arguments one has (good or not).
Since MG is now such a big player in the sim racing world why isn't the biggest sim racing site in the world the correct place to discuss it.
If you dispute the facts or their interpretation then the forum is open for rebuttal and I'm not sure I'd class MG as a development studio in the traditional sense.
I still say best way forward is for studios that care to join forces and make their own Unreal or whatever.
In future if you want sim racing to grow one of the best things you could have is a standardized engine, tyres, FFB constantly developed like Unreal has been
So when Freddy buys sims that use same engine he does not have to relearn everything all over again :)
I still say best way forward is for studios that care to join forces and make their own Unreal or whatever.
When MG first appeared and snapped up several studios I thought that might be what they were aiming at, sadly not.
Although in principle it's a good idea and I'd like to see an attempt at it with the different approaches amongst racing games devs I think it's unlikely to happen.
I'm not sure this forum is an appropriate place to disparage a studio, no matter what arguments one has (good or not).

Above all, you seem to be trolling in an ultra-intensive way rF2 and MG on a maximum of media.

Get out of your house, there's life outside of bashing.
I think a company attempting to sell rFactor 2 screenshots is disparaging themselves.
Well this didn't take long to materialize. This is essentially sim racing's DC Solar.

For those who are pressed for time/data, CEO Dmitry Kozko founded a company called Net Element in 2004.

The company behaved very similarly to Motorsport Games - existing as a company that merely used investors money to buy other companies (think MSGM acquiring Studio 397). They intentionally bought companies that were unsuccessful (such as a credit card payment processor), ran them at a massive loss with next to no revenue, and pocketed whatever they could to live like kings. The CEO was seen in interviews bragging about his Bentley while the company lost $30 million in 2013 and employees were on Indeed stating they weren't being paid and the company was a waste of time to work for.

Once bored of the project, they ran a pretty simple pump and dump scheme that included converting debt into equity.

The sale of Net Element to Mullen (an EV company) is under multiple investigations for breaching fidicuary duties & other illegal practices - investigations that are ongoing to this day.

Motorsport Games in 2018 starts with Kozko at the helm, rapidly snatching up other companies and getting major players like Fernando Alonso to invest, but not actually producing a game of their own for several years until NASCAR 21 - by all accounts a defective product and not representative of the money spent. The company loses money rapidly and has a surprisingly small number of staff for what's supposed to be an AAA game studio.

All while Kozko pockets a salary of $700,000 USD, whereas four other high ups take home I believe $400,000 - these metrics are all publicly available. Kozko is seen making TV appearances, ringing the NASDAQ closing bell, bragging about his car collection in Miami to financing firms, and sponsoring no less than four different race teams on multiple continents.

Over 1 million shares are moved on March 31st, 2022, and they tell investors to not worry that they'll run out of cash by the summer; they plan to convert debt into equity... hey this sounds familiar.

Somehow only just found all this. Wow is all I can say.

Keep it up, Austin! And hopefully other forum users here and content creators join you in trying to highlight the weird, dirty, or cruddy sides of the sim racing world when needed (instead of only covering the good news). You shouldn't be the only voice doing this... and yet somehow you seem to be for now.

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