AWS Services in Industry. The companies use aws services

Given the transformational effect of the public cloud on how we live and do business, it’s hard to believe that commercial cloud services only emerged in 2006. That’s when Amazon launched AWS, with the release of Simple Storage Service (S3), Simple Queue Service (SQS), and Elastic Compute Cloud (EC2), and it continues to dominate the cloud provider market today.

So just who uses AWS — and how? We’ll share a list of the biggest AWS customers, some monthly spending figures, the key services these enterprises spend their AWS budget on, and how they use AWS. We’ll also get into the details of how AWS is dominating the global cloud provider market. But first, a little background on why AWS is the giant of cloud providers.

In 2022, Netflix’s video streaming service had almost 231 million subscribers, up from 26 million in 2011. Revenues for the Los Gatos giant topped $31 billion in 2022 alone. Netflix also welcomed a startling 7.66 million paid subscribers in Q4, 2022, beating the 4.5 million subs expectations.

On the earnings call, CFO Spenser Neumann said that the company wouldn’t be in the business if they didn’t believe it would return more than 10% of the revenue. Amazon Web Services (AWS) represent a large portion of Netflix’s costs of goods sold (COGS). In this post, we examine how much Netflix pays AWS and, more importantly, how the streamer optimizes its AWS costs, so you can too.

How Much Does Netflix Spend On AWS?

Netflix’s cloud spend remained a secret for the longest time, until now. Netflix’s AWS costs were estimated at $9.6 million per month in 2019, according to several sources.

Back then, Netflix revealed it would spend over $1 billion on “streaming services and cloud computing costs” through 2023. Netflix would spend $27.78 million per month on AWS cloud services, according to that plan. In a sense, it is not surprising that Amazon boasts Netflix as one of its biggest AWS customers regularly, even though it owns a competing service in Amazon Prime.

What AWS Services Does Netflix Pay For?

Netflix uses AWS for almost everything cloud computing. That includes online storage, a recommendation engine, video transcoding, databases, and analytics. So most of the $1 billion Netflix plans to spend on cloud services will go into Amazon Cloud Services.

The AWS bill for Netflix reflects the number of servers it utilizes, over 100,000 server instances, according to Amazon Web Services.

Netflix uses over 1,000 Amazon Kinesis shards in parallel to process the colossal traffic it receives from its global subscribers. But that was in 2017 before Netflix grew to over 231 million subscribers in 2023.

What does this mean for Netflix?

These commitments may require a greater investment in AWS cloud services. Second, to satisfy shareholders and to avoid external financing for day-to-day operations, the company needs higher net profits.

In an increasingly competitive market, it must also save costs to remain competitive. That is why balancing cost-effectiveness and scaling is a matter of success or failure for Netflix. Yet, the streaming company has said that setting budgets and other heavy guardrails to limit its engineers’ spending is both “ineffective” and “counter-cultural”.

How Does Netflix Monitor And Measure AWS Costs?

The team at Netflix knows cloud costs deserve to be a first-class metric. That means they treat it like any other performance metric or non-functional engineering requirement. To provide full cost visibility, the company deploys a custom data dashboard. The Efficiency Dashboard serves as a transparent feedback loop to its data consumers and producers. Netflix credits merging cost and usage context via dashboards for its cost-efficient architecture.

The custom dashboard helps provide usage and cloud cost awareness for each team.

How Does Netflix Use Microservices?

Using microservices would also enable its engineers to update different aspects of its service quickly. A change to one microservice wouldn’t crush the entire operation. So, its engineers could experiment with fresh design ideas without affecting the entire Netflix service’s performance. That agility helped the video streaming service innovate faster and cost-effectively, leading to Chaos Engineering, Spinnaker, and Global cloud, as well as the unprecedented growth Netflix sees today.

Netflix uses over 1,000 microservices now.

Each deployed application controls a specific aspect of the colossal Netflix operation.

Why Did Netflix Choose AWS?

Netflix was also struggling with scaling issues on its previous architecture. It needed a solution that did not limit them to vertical scaling. It wanted to scale horizontally, have reliable uptime, and keep cloud spend cost-effective. AWS provided that kind of cloud platform.

Using the AWS public cloud meant Netflix could focus on its core business; video streaming. It did not have to spend billions on building world-class data centers to scale its previous architecture. With AWS, Netflix lets developers use continuous deployment best practices to improve customer experiences, becoming the largest video-streaming service ever.