14 DAY TRIAL // Zynga is a social gaming powerhouse. As it heads towards an IPO, the company has hundreds of millions of users, many of them playing every day. All of these users pose a major problem, you need a lot of computing power to serve them all.
While Zynga games use the Facebook Platform, they need to run on Zynga's own servers. To enable it to scale as fast as it did, in a cost effective manner, Zynga turned to Amazon's Web Services to provide it with its computing needs.
At this point, Zynga is one of AWS' biggest customers since all of the games require quite a massive infrastructure to power them. But Zynga's reliance on AWS is a double-edged sword.
On the one hand, it was able to access more resources as soon as it needed them, one of AWS' main advantages is the fact that it can dynamically scale, based on real-time needs.
It also meant that Zynga was able to get all of this computing power without any up-front investments, it simply paid for what it used every month, enabling the company to invest in other areas.
But, in the other hand, this means that all of Zynga's business is reliant on another company, Amazon. And it's something Zynga is trying to change, it's got enough problems with its big reliance on Facebook as it is.
There is also the issue of reliability. AWS is relatively stable, but if and when it crashes, it takes down all of Zynga's games with it and there's nothing that the gaming company can do about it.
Renting computing power from Amazon is relatively cheap, but after a certain point, it becomes cheaper to build your own data center.
Zynga already has its own servers, quite a lot of them, and plans to buy more, as it revealed in its SEC filing unveiling the upcoming IPO.
"Our technology infrastructure is critical to the performance of our games and to player satisfaction... We own, operate and maintain elements of this system, but significant elements of this system are operated by third parties that we do not control and which would require significant time to replace," Zynga explained one of the risks in its SEC filing.
"We expect this dependence on third parties to continue. In particular, a significant majority of our game traffic is hosted by Amazon Web Services, or AWS, which service uses multiple locations," it explained.
"During the second half of 2011, we expect to make capital expenditures of approximately $100 million to $150 million as we invest in network infrastructure to support our expected growth and to continue to improve the player experience," Zynga revealed.