This isn't a tale of happenstance or luck. This is a story of grit and determination, of a company and an individual with the foresight to put the right pieces in the right places to be ready at the right time, ensuring success amid unprecedented challenges. This is the three-decade story of how iRacing became an overnight American success story in the shadow of a pandemic.
The Massachusetts-based company (formally known as iRacing.com Motorsport Simulations) was founded and largely developed by Indiana native David Kaemmer. It's rooted in his love for all things IndyCar, but its recent success owes much to partnerships with that most American of motorsports, NASCAR.
At its simplest, iRacing is an MMO racing simulator. Imagine mixing the obsessive attention to detail of Microsoft Flight Simulator with the leveling and community aspects of World of Warcraft and you'll maybe start to get the idea. Instead of building characters to unlock greater weapons or skills to face ever-bigger opponents, iRacing drivers, who pay upwards of $8 a month, earn increasingly advanced licenses, progressing through faster cars to challenge ever-quicker opponents. With enough practice, an iRacing amateur might grid up against professionals they've idolized for years, virtually racing on tracks laser-scanned with millimetric precision.
iRacing can be fun, but it isn't a game. It's a simulation, one that requires a decent gaming PC with something like an Intel Core i9-9900k processor and an Nvidia RTX 2080Ti graphics card. You'll also need a steering wheel and pedals to control things. You can read our full guide to building your ultimate iRacing rig here. All-in, you'll probably spend at least $1,000, but it's oh so easy to spend a whole lot more.
Beyond being expensive, iRacing can be so frustrating that many cocksure drivers wash out before their first race. It's on another level compared to something like Gran Turismo or Forza Motorsport. Kaemmer, CEO of iRacing and the man responsible for much of its complex physics engine, makes no bones about the comparison: "Every racing game manufacturer talks about how realistic they are, but from my biased perspective I think that's all bullshit."
Most racing games, Kaemmer told me, create a fantasy aesthetic where you, the player, are really, really good at driving -- even if you're not. "The reality is if you get a Ferrari and you don't know what you're doing, you're going to crash it very quickly."
Appropriately, if you log into iRacing and you don't know what you're doing, you're going to crash. The fear of crashing in the real world is enough to make most people drive cautiously. Once the mortal and financial perils of crashing are removed, most newbie iRacers immediately try to drive flat-out. Even in the relatively slow, introductory cars, that kind of thing usually ends badly.
That's why iRacing's licensing system is unlike most racing games. In Gran Turismo, you simply need to complete some arbitrary driving challenges or win races to advance. How cleanly you drive doesn't matter so long as you finish well. In iRacing, it's all about how safe you are as a driver. Your Safety Rating is kept wholly separate from your iRating, which indicates your relative performance. Crash a lot while you're competing and you'll not only find it difficult to advance in rank, you might actually get demoted. And, crucially, there's no judgment in iRacing about guilty parties. Barring something out of the ordinary, if two people crash into each other they both receive a Safety Rating penalty.
That feels wildly unfair at first, but in practice it's just another aspect of realism. When two people crash in a real amateur race, one person might receive a bigger penalty than the other, but both parties will be responsible for their own damage, whether mechanical or physical. That's the real penalty.
Safety Rating is just one aspect that's grown out of this complex sim, which itself grew out of the many sims that came before. To chart the history of iRacing you have to chart the history of a software developer called Papyrus Design Group and of David Kaemmer himself, that company's co-founder and lead developer. Papyrus's first product, way back in 1989, was a racing game called Indy 500 that allowed gamers to do one thing and one thing only: drive its eponymous event. "I grew up in Indiana," Kaemmer told me, "so the month of May to me is race month, and Memorial Day is race day."
Kaemmer played a few basic, early driving games in arcades and was hooked. He bought himself a Tandy TRS-80 personal computer with money from his paper route and promptly got addicted to Flight Simulator, the early flight sim that would ultimately become the Microsoft-owned juggernaut. Kaemmer read Applied Concepts in Computer Microcomputer Graphics by Bruce A. Artwick, the creator of Flight Sim, and was inspired to create his own games. After college, he got a job at Tom Snyder Productions and worked to create an Apple II title called The McGraw-Hill Mathematics Problem Solving Courseware. Despite the snooze-worthy title, it was actually a bit of an adventure title with 3D graphics of the sort seen in Flight Simulator.
Kaemmer left that company and, with fellow Courseware creator Omar Khudari, formed what would become Papyrus Design Group outside of Boston, Massachusetts. Khudari and Kaemmer knew they wanted to make a race sim, so the two approached the then-burgeoning Electronic Arts. Their timing, as it turned out, was perfect. A producer at EA was working to secure the Indy 500 license. "We were there at the right time," Kaemmer told me, and the result was the game that would do for driving sims what Flight Simulator had done for the flight industry.
"We were this pair of guys, and they gave us a shot," Kaemmer said of EA. He did almost all the coding ahead of the 1989 release, then wrote an Amiga version the following year, which made the project profitable. Indy 500 would be largely repurposed for the 1993 release of IndyCar Racing, with more cars and more tracks, all coded by hand to any photographs or diagrams the small but growing team could get their hands on. It'd be decades yet before laser scanning entered the picture.
While IndyCar Racing developed a small and loyal fanbase, the company's next game, 1994's NASCAR Racing, was a completely different story. "That game just put us on the map," Kaemmer said. Yet again, his timing was impeccable. NASCAR's popularity was soaring. According to Sports Business Daily, viewership of the Daytona 500 jumped by 40% in the years between 1990 and 1994, and then just kept on climbing through the next decade. "It was one of those things where we were just in the right place at the right time," Kaemmer said, for what would not be the first nor the last time. NASCAR Racing won PC Gamer's award for Best Sports Game and Computer Gaming World's Simulation of the Year. A PlayStation port followed, a first for Papyrus, ultimately resulting in total sales of over a million units.
The Watertown, Massachusetts-based team was approximately 40 people at this point, and Kaemmer was about to embark on an experiment that would change everything. "In IndyCar we introduced multiplayer but it was pretty simple. In NASCAR Racing it was improved and we kept getting better and better," he said, but it was time to do something radical, a project dubbed Hawaii.
Verizon ran 128 phone lines to Papyrus HQ and the company built a server with 128 modems. For the first time, gamers could race against each other wherever they were in the country, so long as their PC had a modem that could dial Massachusetts directly. "Every single night all 128 phone lines were busy," Kaemmer said. "We had angry mothers calling us saying 'My son ran up a $650 phone bill in one month!' We realized 'Hey, this multiplayer thing, people really like that!'"
And it wasn't just any random people. NASCAR pro Dale Earnhardt Jr. has talked publicly about his fondness for the service. "I'd race all night," he said in a 2018 tweet. "I shared a double-wide trailer with my brother Kerry. Never will forget the look on his face when we got that first $450 phone bill."
Learnings from project Hawaii would form the core of Papyrus' next title, plus some major advancements in its physics engine. That game would be Grand Prix Legends, and it is truly legendary in the annals of sim racing. Legendary, but not exactly popular. Kaemmer called it "kind of a cult hit." GPL, as it's usually known, featured far more advanced physics that allowed the cars to move realistically in three dimensions. Cars could get air over the Nurburgring's famous Flugplatz section. When their open wheels touched, tumbling carnage ensued.
For serious drivers the physics were fun and engaging. For more casual gamers, it was brutally difficult. PC Gamer, which had gushed over Papyrus' earlier works, labeled the game "progressive, technically innovative, and painfully niche." Thanks to a series of acquisitions, Papyrus was now owned by Vivendi. When the developer announced a plan to rebuild its popular NASCAR franchise on the GPL engine, it met a tepid response. "The powers that be were afraid that if you take the Grand Prix Legends engine, which everyone says is too hard, and you put that on NASCAR, it's going to ruin it," Kaemmer said.
Those fears were misplaced. The Papyrus team persisted and the resulting game, 2001's NASCAR Racing 4, was a huge success, winning multiple PC best racing game awards. GPL's physics engine made the game more realistic, but no less fun. "Turns out the NASCAR cars are a bit easier to drive than a '67 Formula One car," Kaemmer said.
The NASCAR series turned into an annual thing over the next few years, until Papyrus Design Group's former partner EA acquired the NASCAR license in 2003. NASCAR Racing 2003 would be the last of the line from Papyrus and, as it turned out, the end of the road for the company that made it. "Vivendi decided that, without the NASCAR license, this studio might as well shut down," Kaemmer said. And so it did.
Papyrus, a developer that had become synonymous with sim racing, was no more. But it wouldn't be the end of the road.
In yet another happy coincidence, just as Papyrus was winding down, David Kaemmer was introduced to John Henry. Henry, a New England businessman and investor, had just bought the Boston Red Sox. As it turns out, he was a huge fan of NASCAR Racing, even running in an online league with friends. Henry and Kaemmer hatched a plan for something different, something with multiplayer at its core. They bought the source code behind NASCAR Racing 2003 and Grand Prix Legends and set about creating what would become iRacing.
The first shift? To embrace the hardcore nature of driving simulation. "With iRacing we set out to create something to appeal to real amateurs or pros, where they're going to want to use this to actually practice the way that a pilot would use a flight simulator to actually practice," Kaemmer told me. Where Kaemmer's previous bosses had cautioned against punishing difficulty, iRacing would double-down.
The other change would be in how drivers would pay. Most major-market PC developers experience a cycle of booms and busts. A big game, like say a Doom or a Far Cry, sees a massive surge of sales followed by a steep drop-off. After 12 months, sales of games like that virtually dry up. "Our products would have life cycles of five years," Kaemmer told me.
That longevity gave them confidence in piggy-backing on the then-burgeoning MMO pricing model of charging a monthly fee. Today, iRacing access is set at between $5 and $8 monthly depending on your subscription length. "The reality in the racing sim business is that it's a really complicated piece of software, so it's expensive to make them," Kaemmer said. "If a realistic sim was going to work, we were going to have to find a different model, and find a smaller number of people in a way that were willing to pay more for a higher quality experience." How many people? The initial goal was 60,000 to 80,000 subscribers within 10 years. iRacing launched in 2008 and hit that goal six years later.
For the next six years, growth continued at a steady rate, sitting at 110,000 subscribers by 2020. And then came COVID-19. Like so many other industries, global motorsports were faced with challenges never seen before. "How often do you have the entire machinery of sports and media shut down all at the same time?" Kaemmer said. "And then the only sport you can see on a Sunday afternoon is a virtual race." Everything from NASCAR in the US to V8 Supercars in Australia hosted pro racers on iRacing servers. Sim racing eSports went from niche streams watched by few to something you could catch on Sunday afternoon TV. iRacing was suddenly a household name.
iRacing president and CFO Anthony Gardner called the growth "crazy" last year during the COVID pandemic. By April of 2020, iRacing had leapt to over 160,000 active subscribers. It expects to top 200,000 soon.
Where will iRacing find that growth? Kaemmer says the company is looking abroad. Though the service already has a strong international presence, running servers abroad to enable local drivers in places like Australia or New Zealand to compete without game-killing latency, the content selection has been largely domestic. That's set to change.
"There's more interest in racing overseas than there is in the US in terms of dollars and eyeballs. In the US, we have the big four sports, whereas in most of the rest of the world there are one or two big sports: it's soccer or Formula One. America is where we started. It's where we know the racing the best. We grew out of the success with NASCAR, who has been one of our strongest partners in iRacing. We do have a lot of different types of racing here in the US, so it's been a good platform to enable us, to kind of say 'Now we can see whether we can do a bit more.'"
And what about that core physics engine that's been growing and evolving for over 30 years now? Kaemmer isn't dishing details, but says iRacing's long-awaited rain model is nearing completion, and that there's much more to come: "I've been in an R&D phase now for a while. I've got a pretty big set of changes that I'd like to make that I think will make good improvements."
Typically modest promises from a man who's managed to be at the right place at the right time so many times before.