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I live but to serve you
A dedicated server application collects the input from players and distributes it among them in real time. This application can be set up and administered remotely on a for-rent hosting service that offers sufficient bandwidth to serve all clients quickly and equally. Thus dedicated servers remove the host latency advantage present in listen or peer-to-peer servers.
Dedicated servers can be officially or privately run; trusted, ranked or open. They allow additional tracking of statistics, anti-cheat software as well as custom maps, modifications and sounds.
Despite the delay that all signals suffer travelling over large distances, dedicated servers have helped to provide an almost instant, synchronous action in large multiplayer games and a reliable and repeatable experience. An exceeding of bandwidth or computational power is immediately perceivable as lag, delays or stuttering. Even specialized dedicated MMOG servers have to carefully manage, split and distribute the numbers of connections.
Too much dedication?
With overall improvement of bandwidth available to end-users as well as improving hardware, dedicated server support and their substantial running costs may not be necessary, if the number of players per instance stays moderate. Social features like friends lists, and clan support, can make up for servers as a place to meet and shoot familiar faces.