There are games that are about the pure simulation of racing. Then other games that are about as making racing games as fun/accessible as possible. Then there is everything inbetween.

Basically, Daytona USA to this day, is still one of the most fun racing games ever made, but it's about as realistic as Mario.

Personally I love the racing games that are pure fun. Need for Speed Most Wanted (2012), the Burnout games, Sega Arcade racers of old etc. Other people prefer games where the cars act as if they would in real life and so crave the simulation side.

It's pretty much like having an FPS game where you are dead in 1 shot, vs the games where you can go in as a super hero and clean the room out and a few shots to the chest won't stop you.

My question was aimed specifically at the racing sim genre. I get the purpose of Burnout, Need For Speed, etc. Are Forza, Gran Turismo, and Drive Club all aiming to be a racing sim? If so, why care about a studio closing, that didn't get as good review scores as the competition? Does there really need to be more than one or two racing sim games?

I think an FPS where you are dead in one shot would be boring. I also, think it would be the only game of its type in the genre, and would have a very niche market. That kind of sounds like having an RPG where you have to remember to eat, and sleep. Realism usually takes away from gameplay IMO.

DriveClub is not a racing sim. It doesn't concern itself with car tuning, part upgrades, qualifying, race weekends, damage, pit stops. Plus it's all on fantasy road tracks. It's about mastering the tracks and the cars as provided, to pit yourself against other people under the exact same circumstances, no levels, no boost, no assists, no driving line, no rewinds, racing at its purest form.

GT and Forza are much more similar, big overlap in real world tracks and cars which should behave roughly the same as they both claim to be authentic. Then Project cars comes along with more overlap of real world tracks and cars. They all have their own identity though, besides being on different platforms.
Yet you could also ask why FIFA and PES can exist together and have a yearly update as well. Competition is good to keep progress moving forward.
I would say why do you need Battlefield next to Call of Duty, they look the same to me as I'm not into fps. GT and Forza look miles apart to me however.

Now why the studio is closed, I guess the DLC isn't selling much. There is a very active core, and I have been playing it daily again since the Scottish city tracks were released. But it looks like there is not much going on beyond the top 1000 players. I'm playing through the latest DLC while doing the time trial challenges at the same time and consistently placing average 150 in the world without any real effort doesn't suggest very good sales numers. Also my alt has been stuck at 4.2 million in the leaderboard for quite some time, influx of new players has stagnated. The game is already 1.5 years old so its not that surprising.

It's a shame Sony didn't see and merit in a new Motorstorm or a RallyClub. Too niche nowadays I guess, 5 million sales or it's not worth making :/ I wonder how much Dirt Rally is going to sell on consoles. Probably not much, no guns or other methods for killing.

Anyway I just bought Trackmania Turbo and it's awesome! Arcade racing at it's finest, sliky smooth 60fps, instant restarts, split screen, perfect drifting, track builder, true easy to pick up hard to master gameplay. It looks like a last gen title, only 3.9GB install, yet pure fun.