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Why did PlayStation and Guerrilla Games decide to remove live-service elements from Horizon Hunters Gathering?

According to a Bloomberg report cited in the article, Horizon Hunters Gathering received "poor feedback" during a recent private player test, prompting Sony and Guerrilla Games to strip out its live-service elements and reconceive it as a smaller, story-driven co-op game. The decision was also influenced by the high cost and risk of live-service development and recent disappointing or canceled PlayStation live-service efforts such as Concord and other franchise projects. Answered

PlayStation is rebooting Horizon Hunters Gathering to be a traditional co-op game and not a live-service thing
What changes are being made to Horizon Hunters Gathering’s scope and design?

PlayStation and Guerrilla Games are stripping Horizon Hunters Gathering of its live-service elements and retooling it as a story-driven co-op game with a smaller scope. Development will continue with a much smaller team than originally assigned. Answered

PlayStation is rebooting Horizon Hunters Gathering to be a traditional co-op game and not a live-service thing
How will development team size for Horizon Hunters Gathering change compared to the original staffing?

Development will shift to a much smaller team than was originally assigned to the project. Previously the majority of Guerrilla Games was working on Horizon Hunters Gathering, but Sony and Guerrilla have scaled back to a much smaller development team, leaving only a "tiny team" to work on the next single-player Horizon game. Answered

PlayStation is rebooting Horizon Hunters Gathering to be a traditional co-op game and not a live-service thing