Motorsport Games Second Quarter 2023 Earnings Call Actually Said Very Little

Motorsport Games held their Second Quarter 2023 Earnings call last night. It lasted just over 25 minutes and included some interesting information. Notably, it did not include much of what I have seen people saying it did on Twitter:

At no point did Motorsport Games suggest they had invented driver swaps. They were explaining that generally motorsport is solitary and Le Mans (having been specifically asked about Le Mans Ultimate and what makes it different) is a team effort in driving, so that’s what differentiates it from most other driving games.

They did not say anything to confirm sale of licenses, specifically NASCAR. While I firmly believe that the Motorsport Games NASCAR franchises are done because of who I know from their NASCAR title that no longer has a job as of this past week (and the fact that the boss of the studio I asked about it refused to answer), nothing in the call itself suggests licenses may change hands any more than they have in literally every call since early 2022. They have always mentioned the possibility of selling off assets to cover finances.

Anyway… What was said in the conference call? Here is a summary spliced with some of my own commentary:

The company stated that they have “evaluated their projects” and that new CEO, Stephen Hood, has led some restructuring. He then immediately moved onto NASCAR titles…

The first product and update mentioned was NASCAR Heat 5’s Next Gen Car update. This is an update that was significantly delayed for a reason that I am privately aware of, but for some reason was chosen to be released in a very poor state in June. There is no mention of the problems or any upcoming attempt to fix them. They said this had “surpassed expectations” to sell 34,000 units and, honestly, considering this is a figure across both PC and console that seems quite a low figure to me.

Next up was NASCAR Rivals, which added local multiplayer functionality. I can’t imagine the need for that will be very high, but ok, I guess?

Returning to Motorsport Games’ restructuring and revenues, Hood mentioned that projects that wouldn’t “sustain themselves or propel our business forward are subject to scrutiny and possible termination” (because they hadn’t considered this before?) but that their immediate concerns are with sustaining operations (their available cash reduced from $2 million to $1.4 million in a month and their average monthly cash burn is $1.5 million. Revenues are also way down).

Mr Hood then moved back into product specifics, stated that they are confident they can make the necessary “adjustment”, but that rFactor 2 provides a “pathway to sustainability and expansion”, mentioning F1 Arcade and Le Mans Ultimate (which both run on rF2). He then stated consoles remain “part of the future roadmap” despite the fact that only one engine, NASCAR Heat 5/Rivals, has been successfully released by the company off the PC platform.

Things get cryptic when there is mention of moving away from “traditional licensing” and mention of a “platform” that he then explains to be Race Control (what was called Competition System, but no, not the Competition System developed under Marcel Offermans for rFactor 2 – this is apparently something else, and has been in testing for rFactor 2 since May).

Finances, as I mentioned above, look pretty bleak. Jason Potter, financial officer, took over to explain them and none of it sounds great, but they did mention a reduction in marketing (which is good, because the ads were awful – STOP USING THE KARTKROSS TO SELL KARTKRAFT). As usual, Motorsport Games require additional funding to see out the year.

Back to Mr Hood, listeners were invited to ask questions. I’ve trimmed all the fluff out of both the questions and the answers below…

What is going to differentiate Le Mans Ultimate from other titles?

Stephen replied explaining that Le Mans is a team rather than individual series, then also mentioned asynchronous multiplayer, a feature already announced that is a (hopefully) polished version of rFactor 2’s ‘resume from replay’ feature that I myself designed and Terence Groening developed 10 years and seven months ago.

Was the NASCAR Heat 5 DLC release planned over NASCAR Ignition?

It was partially completed, delayed for reasons I’m aware of but am not in a position to say, and Stephen Hood said they decided to finish it off and ship it. He mentioned that there was a “huge uptake” of the NH5 DLC, and basically didn’t mention Ignition.

When will you be cash flow positive?

They’re still looking at “a number of products” in-progress to see what should move forwards to figure out where to go next. They’ll know within the next quarter and will be focusing on near-term projects. I’m somewhat curious what they’ve actually been doing since April, because right at the start of the call they had “evaluated” things already, past tense, but this answer says they still have to do that, future tense… Which is right?