Does Zynga need to compete with Facebook on infrastructure?

Zynga is in a tricky position technologically thanks to its new frenemy status with Facebook. Zynga claims 240 million active users, and it wants a lot more, but scaling to those heights might require one heck of a computing infrastructure. Zynga’s zCloud gets a lot of attention — arguably well-deserved — but Zynga is not the technological powerhouse that Facebook is. Does it have to be?

Build or buy?

What stands out most when looking at Zynga’s gaming infrastructure is that Zynga prefers to buy software or use commercial open-source software rather than build its own. Its zCloud is built upon cloud computing software by (now part of Citrix(s ctxs)), its analytics platform is primarily a Vertica database (now part of HP(s hpq)) and its application servers run the Couchbase NoSQL database. And although it has significantly lessened its reliance on the public cloud, Zynga still runs 20 percent of its gaming workload on Amazon Web Services(s amzn).

Facebook? It runs its own Hadoop distribution, created the Cassandra database and has built countless tools for automating processes and speeding applications. It has scaled MySQL to extremes heretofore thought impossible. Heck, it even builds its own servers and storage as well as designing its own data centers from the ground up. It’s all very impressive, but is it money well spent?

Facebook spends so many man-hours building new software and hardware because it can tune them to the platform’s unique demands and because it can save untold millions on new gear, licenses and energy costs annually as the the infrastructure scales to handle nearly a billion users.

So why buy?

When I asked Zynga CTO Allan Leinwand about his company’s buy-over-build mentality, he told me it was a matter of what’s strategically important. Zynga focuses on deploying infrastructure that “satisfies the needs of our business,” he said, and Zynga’s core business is delivering an engaging gaming experience. “The most important thing for us is building infrastructure that runs our games in the most effective way,” he said, adding that he’d run Zynga on his iPhone if that provided the best user experience.

And it’s not as if Zynga’s zCloud didn’t require some heavy-duty engineering work. As Leinwand explained, the company wants its platform “to be available to everyone on the planet all the time,” and getting to that point meant lots of fine-tuning across the computing, storage and network infrastructure. It has gotten to a point where one of Zynga’s own servers can handle three times the load of a comparable machine image on AWS. Actually, being able to effectively utilize the public cloud for spikes in workload is itself an impressive feat for a company of Zynga’s size.

Fair enough. In fact, buying over building is an approach I’ve championed in the past (although one that I’ve softened on), especially for web startups. But Zynga is a billion-dollar company. If it grows as it wants to — and as its investors no doubt expect it to — the costs of license costs and limitations of commercial software could get cumbersome.

The numbers tell the story

Zynga’s latest financial results illustrate why the company is evolving into a platform provider, but they also suggest the company needs to nail that transition. Yes, the company earned just more than a billion dollars in 2011, but it ended up actually losing $405 million on the year. About $238 million (or 22 percent) of Zynga’s earnings went toward building out its infrastructure. Roughly $445 million went to Facebook as the cost of doing business on its platform.

Facebook, on the other hand, earned more than $3.7 billion in revenue in 2011 and netted a respectable $1.7 billion before taxes. It spent $606 million (or 16 percent) of its earnings on building out its infrastructure. And while Zynga said it expects to spend “in the range of $140 million to $160 million” on capital expenditures in 2012, Facebook is planning more than 10 times that amount as it builds out its data centers around the world.

Assuming it can bring its hundreds of million of users — as well as a vibrant developer ecosystem — to, perhaps Zynga can get back in the black. But what if it grows too fast (or too slow), or what if it wants to get a more balanced revenue stream between in-game purchases (currently about 90 percent) and advertising (currently about 10 percent)? Advertising revenue, after all, is the lifeblood of most web-platform companies (subscription required).

Facebook’s work on its own infrastructure technologies has enabled it to keep scale right along with its user base and their increased activity on the site. Facebook (as well as other web platforms such as Yahoo and Google) operates a massive Hadoop cluster that helps the company build features and target advertising based on what it’s able to learn about its users. Zynga has to hope its off-the-shelf pieces can scale — and do so affordably; if it needs to expand its analytics efforts, it might need to complement the Vertica system with a significant Hadoop deployment.

Being a major web platform is serious business on the infrastructure side, something Zynga no doubt understands. And while its current technology infrastructure is impressive and innovative, history doesn’t seem to be on Zynga’s side if it wants to grow into something as big as Facebook with its current system. Leinwand seems to get this. Zynga is always looking at new technologies and new ways to innovate, he said, because “forever’s an awful long time” to commit to anything on the web.

Feature image courtesy of Flickr user randomduck.