Two of the internet success stories of recent years, Zynga and Netflix, have both come to rely on cloud technology to run their business. Each, though, has taken a unique approach dictated by their different business models. Netflix, realizing that a video streaming platform will eventually be a commodity asset, has built its entire architecture on Amazon’s public cloud. Zynga has adopted a hybrid approach, electing to build out its own high-performance private cloud optimized for games and use Amazon’s cloud only when it needs additional capacity to scale a popular game quickly.
Netflix: Pure Public Cloud
In 2007, Netflix was locked in battle with Blockbuster. A small, but growing number of customers, were streaming movies to their PC’s but the goal for 2008 was to stream content directly to the 65″ TV’s in consumer living rooms. With the launch of Roku, the Netflix team realized that they were facing a massive need for both bandwidth and compute capacity.
By 2008, after another round of costly data center upgrades, Netflix’s operations group faced the decision of whether or not to become experts at building infrastructure on a global scale. A year later, streaming content overtook the DVD delivery business as Netflix began to deliver content to web-connected TV’s; consumers clearly preferred the instantaneous gratification offered by on-demand streaming.
While Netflix management believed wholeheartedly that streaming video was the future of their business, building a brand new data center was ruled out because the future was simply too murky and the risk of going down a dead-end technology path too real. So Netflix pivoted at a multi-million dollar run rate.
2010 saw the entire consumer-facing front end move to Amazon’s public cloud, AWS. 2011 saw the rest of the back-end following onto Amazon Web Services. Today, all that remains in Netflix’s own data center is corporate IT and the DVD business, both dinosaurs in their own right. With 10,000 servers on AWS, Netflix is one of Amazon’s largest customers but is still only a single digit percentage of their capacity. While Netflix has found out that they can’t stretch the elastic service too much, they routinely add 1,000 servers in a single day.
Zynga: A Hybrid Cloud
Zynga supports 232 million gamers each month and their games span multiple geographies. Like Netflix, Zynga frequently has to scale by over 1,000 servers in a single day.
The launch of Farmville in 2009 was the inflection point that necessitated a public cloud strategy to support the rapid growth. Farmville reached 1 million users in the first five days and eventually peaked at 80 million users. At that time, Zynga was 100% architected on Amazon’s public cloud.
In 2010, Zynga decided to convert opex to capex and replicated AWS in their own data center. Today, they use AWS for bursting when they need additional capacity. Over time, they have learned how to ‘own the base and rent the spike’. By adding solid-state drives, tons of memory, and dual 10G networking cards to their own servers, they can stay on the bleeding edge of performance, while still leveraging Amazon’s ability to rapidly scale.
Different Business Models & Technical Requirements
Why do these two different approaches make sense?
The component of the cost structure represented by the underlying infrastructure is substantially different in each case. 50% of Netflix’s costs are content fees and a further 25% are for postage. As the cost of both compute and bandwidth continue to fall, it is likely that content costs as a percentage of revenue will rise. For Netflix, squeezing out the last cent of cost on their delivery infrastructure is simply not worth it and they are content to piggyback on Amazon’s staggering capital investments.
Zynga, on the other hand, needs to reach multiple geographies and devices with games that each put a unique stress on the infrastructure. While public clouds are a ‘great four-door sedan’, each game often needs something different. Owning their own data center means they can architect their private cloud to perform better for games.
Netflix and Zynga are two very different companies. Neither could easily exist without the existence of Amazon’s public cloud offering. But both have used the public cloud in fundamentally different ways in order to remain competitive.
