Should Turn Ten try again with a new Motorsport, I think a new game would be the solution. The current Motorsport cannot be salvaged.
A new Motorsport would likely still not make the numbers to justify the investment in Microsoft's eyes.
Horizon did to Motorsport's niche what video did to the radio star. The world has changed since the glory days of FM1, GT4, and the "immersive couch sim": nowadays, hypercars are a far greater driver of automotive lust than racecars, and technology means that sprawling, varied open-world maps can replace assortments of closed circuits (and notice how people always miss the fictional, "location" circuits from Forza Motorsport's or Gran Turismo's past?).
"But Gran Turismo still sells!": well, yeah, and there's the problem. There's maybe 7-8 million guaranteed, full-price sales in that market, and GT's gobbling them all up. This is no surprise: the whole sub-genre of racing games is, basically, "Gran Turismo and its clones". GT's always been a PS exclusive; FM was supposed to be its Microsoft answer, but it failed to outsell its inspiration even in the 360 era, when Xbox was pounding the Playstation brand into the ground and running laps around them with sales figures.
Forza Motorsport had many issues, yes - but those are, in the grand scheme of things, nitpicks that only the small-ish core of dedicated players picked on. The mass audience, the hordes of Gamepass holders that were supposed to build a critical mass of users after seeing the latest shiny and then join in on the fun, but only casually? Those just said "nah, not interested".
So, where does a, let's say, FM28 go from here?
It could try to stay in the same niche, sure: piggyback on Horizon's success, launch on all platforms at the same time, maybe get better numbers than FM23. Regardless, it won't be a 50-million-users title, not even if it's so well-executed it's a divine revelation.
The other option? Go even further into the "racing sim" direction FM23 aped at, and square up against Assetto Corsa, iRacing, R3E. But that's a niche so small, even a 100% capture rate wouldn't produce anything near the numbers MS is looking for to justify the investment. And in that community, Forza is
a slur - people are not going to line up to try that game no matter how good it is.
Another factor of Motorsport's success in its halcyon days, one that I feel may not be talked about enough, was its community. Forza owes much of its success to the features that, at the time, set it apart from Gran Turismo. But even those features would have amounted to nothing, if there wasn't a vast forum-based community of racers, tuners, painters, and all other sorts of creators and competitors showcasing the potential of the game.
That kind of emergent behavior is gone: that's not because FM23 is a worse platform than, say, FM4 (although it certainly is, in some aspects). The times have simply changed, and the online landscape with them: forums have gone the way of the dodo, replaced by alienating, algorithm-driven social media.
On the other hand: Horizon is the kind of game where you can just hop in and have some fun on your own, or with a couple friends - either by playing in its huge sandbox, or focusing on the Festival Playlist. FM23 tried to provide some of the structure of the latter with the way its public lobbies are structured: still, I think we can all agree the results have been quite underwhelming.