Motorsport Games seem to be on the white flag lap with their IndyCar license.
What I would classify as a particularly damning Q3 earnings report for the company has led to a number of dominoes falling.
Conspicuous by its absence in the report is any mentions of “British Touring Car Championship,” “BTCC” or “TOCA”. This is particularly interesting considering TOCA announced the day prior that they had terminated their agreement with Motorsport Games, after over three years under contract with nothing to show for it.
The statement announcing the termination is damning if not short, clocking in at 206 words. It ends with these three paragraphs:
“It is with regret that TOCA now advise that it has been forced to terminate that agreement forthwith, due to ongoing fundamental breaches of the agreement by Motorsport Games. Having been given sufficient latitude to rectify those contractual breaches, unfortunately Motorsport Games has failed to do so.
“In order to protect the reputation and intellectual property of the BTCC, including those of its participants and partners, TOCA had been left with no option but to terminate the agreement and immediately withdraw all licensed BTCC rights that were provided to Motorsport Games under that agreement.
“TOCA is aware that this news will come as a huge disappointment to our hundreds of thousands of fans, many of whom were eagerly anticipating the release of a new BTCC game… and we very much share that frustration, due to Motorsport Games being unable to fulfil its contractual commitments.”
So, how does this all relate to IndyCar? Well, the next day, MG announced in its earnings report that it had closed down its Australian game studio that was making its licensed IndyCar game, while also suspending development of it.
IndyCar infamously pulled out of iRacing at the end of 2022 due to its exclusivity contract with MG, with the IndyCar game set to launch in 2023. Instead, the game was delayed, and now seems lost out at sea.
IndyCar, unlike TOCA, have not cut their losses with the developer. MG, for the record, states in its filing that they plan to “plans to “identify opportunities to resume development of its IndyCar title elsewhere within the business following the closing of its Australian studio”.
That wasn’t the only items of interest in this filing. I am not an accountant, but if I am reading this form correctly, it seems as if MG has lost almost $17 million this year alone, having “approximately $1.2 million” cash or cash equivalents on hand on September 30th.
This number increased to $3.2 million by October 31st, thanks to the sale of the NASCAR license in October.
Yes, a month after selling off possibly its most valuable license, they only had $2 million more to show for it in part due to burning through so much cash monthly.
The best bit in the whole statement comes at the end of a section entitled “Select Financial Highlights for the Three Months Ended September 30, 2023”, which really encapsulates how poorly ran this company is:
“In addition, revenue for 2023 was $1.7 million compared to $1.2 million for 2022, a $0.5 million, or 38.5%, improvement that positively impacted net loss. The increase in revenue was primarily driven by the release of the NASCAR Heat 5 DLC, Next Gen Car Update, in June 2023.”
NASCAR Heat 5, of course, is a video game that came out in 2020 and features Matt Kenseth, Jimmie Johnson and Clint Bowyer as regular drivers in the base game. The Next Gen Car Update was a 2022 update that was released in June of 2023.
That is not a typo. They put out a 2022 DLC pack at the halfway point of the 2023 season. For a game that came out in 2020, because the game they released in 2021 was in such a terrible shape that they had to abandon it.
This was the primary reason cited for their revenue going up 38.5% year-over-year.
I know we’re 600 or so words into Inside IndyCar and there really hasn’t been much actually on IndyCar, but this has all been just to illustrate how ominous the original column on this topic was as far as IndyCar making a gigantic mistake in trusting this company.
Video games are a tricky thing to get right, but it seemed like IndyCar had been doing the right things prior to entering the MG agreement. It had built up a loyal following on iRacing, with virtual Indianapolis 500s being a mainstay of the service in the month of May. It being in Forza Motorsport introduced it to new audiences that weren’t going to buy an IndyCar game or drop serious dough in iRacing, but would be willing just to try out how they drive.
Originally, the argument was that MG didn’t have the track record nor could be trusted to put out a game that was even half finished. Somehow, even that expectation seems to be out of the window. Now, they can’t even get any game out. That being said, MG is still up to date on its payments for its IndyCar license, having only fallen behind in its dues for the BTCC license.
And this has cost IndyCar good will with the iRacing community, one they will have to rebuild once they figure out a way out of the MG contract. It cost IndyCar years before potentially having a dedicated game out on store shelves. And it makes IndyCar look completely ridiculous, especially as the race series the IndyCar brass is most jealous of, Formula 1, seems to still be speeding along with solid game titles every year.
And as for Motorsport Games, the financials speak for themselves. I’m sure Studio 397 will find a landing spot once the cards collapse, and their Le Mans game will find a home. But it’s clear that no game publisher has ever done this level of damage to so many different racing series licenses. As the last to hop aboard the sinking ship, IndyCar now must find a way off of it safely.
About the author
Michael has watched NASCAR for 20 years and regularly covered the sport from 2013-2021. He moved on to Formula 1, IndyCar, and SRX coverage for the site, while still putting a toe in the water from time-to-time back into the NASCAR pool.
We hate spam. Your email address will not be sold or shared with anyone else.