It was waaaaaaaaaaaaaay too hard at release and they took way too long to release the difficulty patch. Add to that long load times and it's no surprise that people didn't generally like the game.
With Mario Kart, anyone can pick up and play it and have fun. The general person can play through the career and do decently well while being bad or at least struggle through the first cup.
With ModNationRacers, it's absolutely unforgiving in its difficulty. I couldn't get past the third race in the carreer (and I know I'm not along on that, the fact they made that patch proves it) and that's bullshit. On a casual game I shouldn't get stuck like that on the third race, especially when I breeze through the first two and even complete most of the challenges. I tried for hours to get past the third race and just couldn't do it and vowed to stop playing the game.
I could have gone online and played but the game made me think I was so bad because I couldn't finish the third race I just assumed I was way too bad for online.
So yeah, extremely difficult unforgiving gmae that discourages people from playing online. It just couldn't decide if it wanted to be casual kart game like Mario Kart or a hardcore racing game.
Why are people confused again that this game didn't do well?