Dedicated Server vs Peer to Peer vs Co-op Hosting: What's the Difference?

When you play a multiplayer game with friends, someone or something has to run the shared world. There are three common ways that happens: peer to peer, one player hosting a co-op session, or a dedicated server. They feel the same when everything works, and very different when it does not. This guide explains each one and helps you decide which you need.

The three ways games connect players

Peer to peer

In a true peer to peer game, every player's machine talks directly to the others and each one runs part of the simulation. Fighting games and some older strategy games work this way. There is no central authority, so the game is only as smooth as the worst connection in the group, and it is easier to cheat because every player's machine is trusted.

Co-op or listen server hosting

This is what most survival and co-op games mean by "host a game". One player's game acts as the server while they also play. Everyone else connects to that player. Minecraft's Open to LAN, Valheim's Start Server from the menu, Palworld's co-op mode and player hosted worlds in Enshrouded and Dragonwilds all work like this. People often call it peer to peer, but technically it is a listen server: one player is the host.

Dedicated server

A dedicated server is a separate program that runs the world and nothing else. Nobody plays on it directly; everyone, including the owner, connects to it as a normal player. It can run on a spare PC at home or on a machine in a data center. Most games that take multiplayer seriously ship a free dedicated server program for exactly this reason.

Side by side

	Peer to peer	Co-op hosting	Dedicated server
World online when host is away	No	No	Yes
Cost	Free	Free	Free at home, or a monthly fee hosted
Setup	None	Usually a menu button	Install, configure, port forward, or pick a host
Performance	Depends on everyone	Depends on host's PC and upload	Consistent, uses its own resources
Player limits	Game's co-op limit	Game's co-op limit	Often much higher
Mods, plugins and admin tools	Limited	Limited	Full control
Your home IP shared	Yes, with everyone	Host's IP shared	Not if hosted in a data center

Pros and cons of co-op hosting

Pros: free, no setup, and great for a quick session with one or two friends who play at the same time.

Cons:

When the host logs off, the world goes with them. Nobody else can play.
The host's PC runs the game and the server at the same time, so they get lower frame rates and everyone gets lag when their machine struggles.
Home upload speed is usually the bottleneck. A good download speed does not help if your upload is small.
Player caps are lower. Palworld co-op allows 4 players while a dedicated server allows up to 32. Dragonwilds allows 4 in a player hosted world and 6 on a dedicated server.
Saves live on the host's PC. If they quit the game or lose their drive, the world goes too.

Pros and cons of a dedicated server

Pros:

The world stays up around the clock, so people can play on their own schedule.
Performance is predictable because the server has its own CPU and memory.
Higher player limits and full admin control: whitelists, bans, rates, mods, plugins and scheduled restarts.
In a data center, nobody sees your home IP and your internet is not shared with the server.

Cons:

Running one at home means a PC that stays on, port forwarding, firewall rules and dealing with updates yourself. Some home connections are behind CGNAT and cannot host at all.
Hosting in a data center costs a monthly fee.

When you need a dedicated server

You will be glad you have one if any of these are true:

Your group plays at different times. This is the big one. If one friend plays in the morning and another at night, only a dedicated server lets both play in the same world.
You have more players than co-op allows. Palworld, Dragonwilds and several others raise the cap on dedicated servers.
The game only has dedicated multiplayer. DayZ has no player hosted multiplayer, and community Rust servers are all dedicated.
You want mods, plugins or custom rules. Minecraft plugins, Rust's Oxide, Valheim's BepInEx and custom ARK rates all work best on a server you control.
You are building a community. Public or semi public servers need moderation tools, logs and backups that co-op hosting does not have.
The host's PC struggles. If the person hosting has lag while everyone else is fine, moving the server off their PC fixes it.

When co-op hosting is enough

If two or three friends always play together at the same time, the game has built-in hosting, and nobody minds the world only existing when the host is online, co-op hosting is fine. Plenty of groups start this way and move to a dedicated server once their schedules drift apart.

Home server or hosted?

A home dedicated server is free apart from electricity, but you give up a PC, deal with networking, and share your home IP with everyone who joins. A hosted server costs a few dollars a month, lives in a data center with its own address, and is managed from a web panel. The right amount of memory matters either way, so check how much RAM a game server needs for your game.

Want ideas for what to run? See the best games with dedicated servers and the best survival games to play with friends, or browse every game we host on the games page.