Mag is different from RO, even the best server probably wont be able to host a 128 player ROHOS server let stand a 256 player one. When comparing games you should at the least use UE3 ones as an example.
To get a 256 player game to run you need to make heavy compromises on loads of things. And to even get 64 players to run well on a console you probably need heavy compromises as well, although the UE3 streaming technology could help perhaps. Hosting a server requires a lot of processing power.
How twi could still make a profit while offering dedi servers, its basically calculating the costs and taking that into the calculation for the base price.
Servers generally cost a yearly fee, when you're owning the dedicated servers yourself you should be able to host a slot for under 1 dollar a month including bandwidth and the write off on the hardware.
Generally in a game only a very small percentage of the people owning the game are actually playing the game. Aka you do not need 1 slot per player that bought the game. Beside the initial release you probably won't see more than 10% max of the player base on-line at the same time (and that is a very generous guess).
So this makes the server cost per player that bought the game to perhaps 10 cents per month. Booking away 5 dollar for dedicated server fees, and taking into account the expected popularity curve. Makes that TWI could support dedicated servers for a few years out of that little money per buyer (aka you have loads of servers at initial release and then slowly scale down till you end with 1 or even none servers).
The neat thing is that if less people buy the game, then you will need less dedicated servers. So the amount of servers needed will go up linearly with the amount of games sold. So its a relative easy write off. Its its quite doable to balance have a constant budget per player for the servers. If the attach rate of people playing the game is really high, then you can decide to release dlc, or a fully new game and kill of the old one.
The exact reason why during patches and initial releases games and steam drop out. Is exactly because the servers capacity is calculated around an average daily max usage plus a safety margin (usually 2 or 3 times the standard deviation above the mean daily max value). As indeed if you calculate servers needed on how many players could possibly play at one time then you would go bankrupt.
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