Inside the Turmoil at Motorsport Games

CEO Dmitry Kozko is tired of the narratives surrounding his company. Motorsport Games is a well-known name in the world of virtual racing, known for its racing simulations and partnerships with major motorsports organizations. However, the company has recently faced a number of challenges and controversies, including reports of mismanagement. 

From the poorly received launch of NASCAR 21: Ignition to delays of currently in-development games to even employee and executive team shakeups, it seems like the company can’t stay out of the negative spotlight. But what’s really been going on within the Miami-based company, and is it really in as much trouble as one would assume?

“It’s starting to be irritating that the rumors and twisted pieces of small bits of information sometimes cast shadows on the great people that we have here at MSGM, trying to deliver great games and competitions,” Kozko said. “We are here to make official racing games that will be enjoyed by the masses.” 

These “rumors and twisted pieces of information” come after multiple issues have surfaced from a number of current and past employees alongside other sources close to the studio who have stepped forward to talk about the company and its inner workings. 

One source specifically equated Motorsport Games’ current situation to 2017’s Fyre Festival, where so much is promised but nothing that’s promised actually happens. 

“It was a mess,” another person said. “You’d hear one day about these grandiose plans for the games and how everything is starting to turn a corner only to find out days later that people you were close to in the company were fired by email.”

When asked about the email-based dismissals, Kozko wasn’t aware of anything like that happening. He says that there is a procedure in place whenever a termination has to happen.

“According to our legal and other advisers – and to my understanding, a standard across many industries – in situations like reductions in the workforce that we pretty much went through, all affected employees had to be notified in writing first at exactly the same time,” he said. “But again, to my knowledge, all employees that responded to offered conversations were spoken to – and everyone was offered. Unfortunately, I had to personally participate in some too with our HR. But it was the right thing to do: for everyone affected to be spoken to and to answer any questions such former team members might have. So such employees that took the call request, had the call with HR and their line manager. My direct reports that were unfortunately affected as well, I was present on the video call to deliver the unfortunate news, apologize directly, and answer any of their individual questions.”

Even if it was a supposed standard that all impacted employees be notified in writing first at “exactly the same time”, many of those who were let go weren’t appreciative of it.

A Lack Of Trust

Trust has also been an issue over the last 12-plus months within Motorsport Games. From the executive level all the way down to entry-level employees, there always seems to be something that was said only to be the opposite of what was actually happening.

“There was always some sort of argument going on because no one wanted to listen to anyone’s suggestions,” a former employee said. “If it wasn’t what the other wanted to hear, it would be fought about.”

Specifically, on Kozko, the same former employee said that it felt like, at times, that if you didn’t agree with him or give him the answers he wanted to hear, it was likely you wouldn’t last long in the company.

When asked about the lack of trust and in-fighting, Kozko didn’t deny that there have been issues of late but did say that something that could be perceived as fighting by one, wouldn’t be the case by another.

“[It’s] hard to classify what are arguments and what are constructive working discussions,” he said. “Trust was definitely affected after the launch of Ignition, but we are working diligently internally and externally to improve and earn the trust of our community.”

Regarding NASCAR 21: Ignition’s status at launch and even after a number of post-launch updates, Kozko knows that mistakes were made surrounding the title.

“We know we messed up on Ignition and ever since we have been trying to make things better by showing that we are sorry and that our mistakes were not intentional by any means and we are paying the heavy price for them every day since,” he lamented.

And then, just when you think you're finally going to race, this happens. And it happens far too often #NASCAR21 pic.twitter.com/6ZFcmAu7bW

— Mike Straw of Insider-Gaming.com/TWSN.net (@MikeStrawMedia) October 22, 2021

Those mess-ups with Ignition seemed to be occurring well before the public got their first looks at the game. Going back to trust, sources said there were issues between the development team based in Moscow, Russia, and the developers in other locales. Multiple sources even claimed that there were instances of “fake deliverables” being sent by the Moscow-based developers to show the progress that didn’t actually exist during the development of NASCAR 21: Ignition.

“Deadlines just weren’t being met and deliverables weren’t being hit,” one said. “What they said was being worked on and what actually was being worked on were two different things.”

Kozko denied the fake deliverables claim but did admit that some of the company’s former leadership did question status reports.

“Not factual,” he said. “It was perceived by some that previous studio leadership individuals would “sugar coat” the status reports. Whether that was factual or not, either way, we have a new studio leadership now, with much better processes and checkpoints.”

The lack of trust in the Moscow-based team only became larger when a situation arose where it was discovered that a developer was attempting to raise funds for another title while working for Motorsport Games on its games. 

Sources said that it wasn’t discovered by the team until a press release with the developer’s name was released. Kozko says that it was discovered after certain people at the Moscow studio had already been dismissed who were later found to be involved. This again leads to talks of trust between studios not being the strongest. 

Changing The Process

Kozko says everything that has happened has allowed the organization to improve and make changes to the standards it wants to uphold for everyone on the team.

“Learning from Ignition’s release we had to elevate our standards much further and put a lot more checks and balances in place,” he said. “Motorsport Games is one of the newest studios out there with some of the biggest ambitions, but we are committed to bringing the thrill of racing to the masses. 

“On being distributed across our multiple studios, the biggest of which is in the UK and Australia now does require good integration of the development process. Many companies have proven it to be possible and we strongly believe we will be one of them. Studio397 that we acquired has had a distributed development team for almost a decade and proven to deliver the most respected racing simulation experience in our space, enjoyed by many professional sim drivers and real-world drivers. Just look at our 24 Hours of Le Mans Virtual participants. I am very proud of what the team has done there.”

Aside from overall trust, another major point of contention with developers is that it felt as though suggestions from the team wouldn’t be heard, instead simply falling on deaf ears.

“We would say we need more developers to work on things, and we’d be fought,” one said. “We wanted specialized developers on the games to make sure things were as good as they could be, instead it was a belief of many in the position to make decisions that developers should just be able to hop from game to game, project to project.”

“It killed the fun of building video games, and we were just exhausted,” another former developer said. “It’s like no one wanted to listen to the people actually building the games.”

Kozko says that he requested better systems and tools multiple times in order to measure the workload being put on his developers. He said that he never received anything that could do what he wanted until recently when current leadership was able to put the tools and processes in place.

“Our goal is to never spread our team too thin, but we need data to measure loads,” Kozko said. “As someone that deeply cares about our team, I am always concerned about anyone being stretched too thin, therefore I like everyone’s workload measured, especially in development where it’s a standard practice.”

According to one source, former president Stephen Hood would often talk about the company’s licensing agreements and the status of games. Hood was quoted as saying on more than one occasion, “It’s good to get licenses, but the games need to be good”. He would also make mention that because of the financial status of the company, it wouldn’t be able to recover from a bad game that’s released, but it could recover from a delay to make sure things were fixed.

With NASCAR 21: Ignition, it wasn’t just a bad game at launch to fans. Even those inside the company at the time felt the game was a mess as more and more was stripped out during development.

“Early dev builds of NASCAR 21 were better than what was finally released,” one person said. “Features had to be stripped so often, but stripping those features led to game issues that weren’t then given enough time to be fixed.”

“There was a simple refusal to get out ahead of the issues,” another person close to the game’s development said. “Game delays would be known by the dev team, but Dmitry would look for a single reason to not delay. As long as there was a non-zero chance of a delay, it wouldn’t get delayed. Instead, it would wait until there was an absolute zero chance of hitting a deadline before being announced.”

One person still with the company said that it didn’t matter whether it was time or resources, something always seemed to be on the chopping block. They also claimed that there was a “longtime between knowing about problems and possible delays and acknowledging them”.

To that, Kozko said that he and his leadership teams are always reviewing the progress of titles and the current challenges constantly. He wouldn’t call them a delay and acknowledgment problem rather than figuring out how to work through the problems to get to the desired goal.

“Everyone has challenges and we are not an exception,” he said. “We are after an aggressive goal in our game genre that was not done before, so we don’t expect our roads to be smooth. But passion and resilience in our team will fuel this race. We know where we are heading and it’s a matter of time till we get there.”

As to the claims that time and resources were often cut, Kozko says that not only was there no cost-cutting for Ignition but that there has never been any cost-cutting to development budgets “to date”.

“We continue to invest in our development resources while finding efficiencies in the development process,” he said. “We do however constantly evaluate outsourced partners we leverage. The 2022 Restructure Program did not affect any development resources, except for the head of studio who is part of my leadership team, and who agreed to take a base salary reduction as part of such program.”

One current development team member backed up Kozko saying that he was given what he needed for the projects he was working on.

“I never saw anything held up or cut down because of cost,” he said. “Everything I needed I was able to do. Not once was it ever relayed to me that something I was working on was going to be halted or scaled down.”

As part of that restructure, product timelines were changed at Motorsport Games that saw the only NASCAR game to be released in 2022 be the new NASCAR Rivals for Nintendo Switch, an updated game that continued to use the old NASCAR Heat game engine rather than the engine used by NASCAR 21: Ignition. What Ignition received was a 2022 season update alongside a number of new paint schemes and track updates with 2023 expected to see the next full release of a new NASCAR video game.

What About The Other Games?

In addition to NASCAR, the studio has games for 24 Hours of Le Mans, IndyCar, and the British Touring Car Championship (BTCC) in development. While both the IndyCar and BTCC titles have been delayed to 2023 and 2024, respectively, Kozko is adamant that both will be delivered and both will be quality games.

“The IndyCar game is already playable and we are able to pull screenshots directly from the game today, even using an already functioning Photo Mode from inside the game,” Kozko said about the status of the IndyCar game.

Regarding the status of BTCC, no less than four sources have said – including some still within Motorsport Games itself – that the game has all but been canceled. 

“BTCC pretty much got canned a while ago,” one source who still works at the company said.

Kozko emphatically denies any sort of cancellation is coming for the BTCC title.

“If that was the case, we would have announced it. But that is not the case,” he said. “So I would not pay much attention to such four sources creating rumors around us. We are a public company and any material changes will be publicly disclosed promptly, as per SEC, NASDAQ, and other rules and regulations that we comply with. We are moving full force ahead with all the resources that we have. We are here to make great racing games, period.”

Whether the game is officially canceled remains to be seen. But it’s clear there is a belief among many both inside and outside the company that it’s not happening. And a lot of that belief has to not only do with the development happening within the company but also with its aforementioned financial status.

For months now, Motorsport Games has told investors during its quarterly earning calls that it is losing money and didn’t have enough cash on hand to make it through a 12-month period. The funding issues not only led to the departures of executives like Hood and former Chief Financial Officer Jonathan New, but it all came to a head in November when the entire Board of Directors resigned due to what was reported as a dispute over how funding would be raised for the company.

Despite the board changes being painted as a picture of a better future for the company, one current employee told Insider Gaming then that it was “the usual bullshit of everything is fine because he (Kozko) just wants money and has done these things twice before”.

Will Motorsport Games Be Around In 2023?

With regards to money, back in June, Motorsport Games was informed by NASDAQ that it was no longer in compliance with the minimum bid price of $1.00 or more for 30 consecutive days. Because of this, there was the distinct possibility that it could be removed from the NASDAQ. However, five months later, the company was able to regain its compliance after enacting a 1-for-10 reverse stock split to raise the per-share trading price of the common stock. 

As far as the future of the company goes, money remains an issue. During its third-quarter earnings call, it was once again relayed that Motorsport Games didn’t believe it had enough funds on hand – approximately $1.8 million as of October 31, 2022 – to make it through the rest of the year. It was also stated that the company expected to “continue significant operating losses” and “incur losses for the foreseeable future” as development continues on its various titles.

A bit of breathing room did come in early December with the announcement of an equity agreement with an investor for up to $2 million. The money that would come in from selling shares in the company would give them time to get through the rest of 2022 and into 2023. That said, more funds are needed to continue the development of the games they have on their plate.

Still, there is the prevailing thought of almost everyone who spoke about the company that the IPO, or initial public offering, and going public was a major mistake by Motorsport Games. That’s something that was quickly shut down by Kozko.

“In my personal opinion, I disagree,” he said. “Going public gave us the resources to acquire the technology we need to be the most authentic and fun driving experiences in entire interactive entertainment, and to grow our team to the levels we would require to scale this business.

“We run very efficiently, like a startup, but processes and management are required to assure quality, compliance, and ultimately, fan satisfaction. We handle some of the most valuable IP in racing, which also requires checks and balances to be a good steward of those brands.”

With those IPs and licenses such as NASCAR and IndyCar, there are fans who have wished on social media that they would be picked up elsewhere. There was even discussion within NASCAR earlier this year of the team wondering about ways to get out of the deal. That ultimately went nowhere because based on the deal NASCAR currently has with Motorsport Games, there was no other company willing to match or even come close to what it’s getting now.

There have also been rumblings of Motorsport Games looking or even hoping to be acquired, with iRacing being brought up as a possible suitor. While iRacing did talk about it internally back as late as spring 2022, nothing moved forward on that point due to the various contracts that Motorsport Games has alongside the NASCAR one. 

“I would not believe any company would want to buy out or acquire Motorsport Games due to having to take on the current contracts and obligations, all of which were secured with high fees,” one source claimed. “You would think they rather wait for the company to fold and get a new license deal with new evaluations.”

“We do not ‘hope of an acquisition’,” Kozko said. “We are focused on delivering good racing games to the masses. We, sort of, took only our first lap so far, went back to the pits for adjustments, and out on our next lap.” 

“Just like any recently formed studio, compiled of experienced and passionate team members, we are finetuning everything while working on delivering an exciting garage of official racing games. If after that someone wants to make an offer that will make sense for our shareholders, we’ll discuss it then. But we are planning to be here for the long run. It’s not a drag race for us, it’s an endurance race with the goal in mind to achieve something that was never done before.”

It’s clear from talking that Kozko and plenty of others who remain at Motorsport Games do want people to be able to play great racing titles. The question becomes is the right leadership in place to actually deliver those titles or will more major changes need to be made from top to bottom before things get worse financially for the company.

“I think we’re starting to get things into a good place after a year of hiccups,” a current non-development employee said. “I believe in the overall mission and will be happy to see what people say in a year or two.”