Some of our clients who choose the colocation route look for long-term cost savings. Rent a machine for $100/month or colocate it for $50/month, long term if you plan to use the machine for many years it will pay itself back. With that said, some like the option to upgrade machines every year to...
Yes, geographical location matters a lot. Game servers as well as other services need low latency to perform optimally with the desired targeted user group.
The ads we have run on Twitter and Instagram for our game host never really performed well either. Seems forums and partners are the way to go for getting new customers.