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Some early PC multiplayer games use MIDI interface to support up to 16 players, like MIDI Maze.

Its Game Boy ports also supports 16 players, via link cable and adapters.
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jamyskis: A lot of this has to do with changing attitudes towards multiplayer experiences. Multiplayer gamers always wanted the kind of progression and persistency that single-player games offer, along with matchmaking for gamers who don't have many friends playing the same games, and this basically paved the way for the kinds of centralised architectures that we see today.

While dedicated servers can offer a lot of the above in theory, anyone who played games like CoD 4 back in the day knows that it was never feasible in practice. Each server would store the persistent states of each player, but many servers were prone to being taken offline at a whim by the operator, or being overloaded by unexpected attention.

It's certainly nice when games offer LAN modes, direct IP connections and dedicated servers, but it's also a harsh reality that the first two were subject to severe limitations by their very nature, while the latter only caused player base fragmentation and put players at the whim of some very unstable server operators. I still play Urban Terror on occasion and I've seen public servers pulled offline for some of the weirdest reasons, most recently one in the UK who pulled his servers because Arabic was supposedly being spoken over voice chat and he "didn't want Muslims on his server" (funnily enough, it turned out to be Russian).

I honestly can't say why any given developer would choose to omit a LAN mode - maybe some do see it as a form of covert DRM, but there are also legitimate reasons such as keeping the player base together and offering community-wide features such as leaderboards (if that's your thang), and some may simply not see enough potential use to make implementing a separate LAN mode worthwhile (a not entirely unrealistic viewpoint when you consider how quickly the communities of many of these online-centric games die out nowadays, especially on Steam).
The main reasons I can think of for not including LAN and/or DirectIP modes are (in order of likeliness):

1) To discourage piracy by requiring legal ownership of the game to be able to play multiplayer.

2) To avoid fragmentation of the multi-player community into walled gardens.

3) To be able to have a greater control over restricting cheating in multi-player to improve the experience for customers that do not cheat nor want to experience others doing so.


#1 is a given, the other two make sense to varying degrees with some games and not at all with others. Personally I'd prefer all games to support DirectIP and LAN modes probably like most people who have an opinion that isn't neutral, but I can have some understanding for all 3 of the above, and even some benefit to paying gamers for all 3. I think for larger games #2 is less of an issue simply due to the size of the community, but #3 is potentially more of an issue. #1 also helps to cut down somewhat on #3 potentially. But if all multi-player modes are available then each gamer can choose their own desired experience ultimately. Personally I have used and would use all 3 modes with various games depending on the situation, and I prefer greater flexibility.

But at the same time I would always want an option to play on company sanctioned matchmaking services which require legitimate licensed gamers also as there are a lot of assholes on the Internet that want to just ruin everyone else's experience "for the lulz", trolling etc. without any consequence. If you have to pay to own the game and have a legit key and you're an asshole/cheater/whatever and face the possible consequence of say... a VAC ban or similar, then there is a monetary cost towards being an asshole gamer and ruining the game for others. In public games, I like that option existing and having VAC enabled games as an option at least. Still it's nice to be able to run your own servers as well and admin them directly, use firewalls etc. to get rid of the chaff.

One thing is sure though, we're not in the 90s anymore. The odd game might old-school add in LAN/DirectIP but they're a dying breed these days and I doubt that will change going forward. At the end of the day gamers end up either buying the games and playing them while grumbling under their breath about this (which is what most people who care either way likely do), or they bow out and refuse to buy the game, in which case they are likely to be a small dot on the radar which doesn't affect the game's profitability to any large extent, otherwise the practice we see now with regards to multiplayer would not be profitable and they would change it.

Sucks to want to set up a LAN party though and every computer has to connect to the mother brain. That's the main scenario that irritates me. Sometimes you have to do a lot of firewall hoop jumping with multiple computers behind NAT for MP to work with certain games properly, while others are simpler.