Obviously that would be a problem on the PC but games would remain popular and publishers would get paid without either of those things. Games as a whole wouldn't go anywhere. They just make more money this way.
The main reason I still play is to continue improving, and I don't think I could ever do that effectively if I was limited to only playing against people in my local sphere. My rank typically puts me somewhere in the top 1% of players (and honestly, I'm not even that good. The skill ceiling is insanely high), online match making may be frustrating sometimes but it's the easiest way to find opponents who will push those boundaries.
Would a hosted server work well for people who are much lower ranks who are primarily playing to just mess around with friends? Probably. I would quit tomorrow if online matchmaking went away though.
There are many different attempts at business models in games. Splitgate started with your suggestion and has since gone free to play. Numerous MMOs have tried subscriptions and have gone free to play. It's a sad state of affairs, but for every successful Minecraft, Stardew, or Valheim, there's thousands of failed attempts.
The point I'm trying to make is that these things have been tried by one game or another, and there's good reasons why the "run your own server" model died for the most popular games. Ignoring that is, I think, discarding a lot of historical evidence and nuance against blanket "why don't they just do X" arguments.
If there's a better way, it won't be a return to the past. It will be something new that no one has thought of yet.
Yes, obviously a big part of it is that every studio is hoping for their game to become the next WoW or Fortnite or Destiny— a franchise that will print money for a decade with not much more investment than a few content drops a year.
But I think the expectations of players have changed too, as far as matchmaking, leaderboards, progression, anti-cheat, anti-abuse, etc. You just can't deliver these things in a consistent way with the distributed client-server model, and companies needed to own the end-to-end experience vs farming out the community management side to faceless volunteer guild/clan/server operators.
> It isn't like not being a live service game killed Quake 3, for example.
Dead to who? It still has players, but it's "financially" dead, which is what the studio cares about when making these choices.
Keep in mind again that this is about the game surviving not about squeezing all the money possible out of their playerbase - after all the topic was about hating what video games have become.
It isn't like not being a live service game killed Quake 3, for example.