Tbh they probably already are, $500k/month is a lot of money. They would be able to get those costs down by hiring a few it engineers and renting a few racks at a CoLo. Geographic distribution is hard for a company of their size, though, and maybe it's not worth making that investment if the game's popularity isn't going to last.
Yeah the up front cost of the type of infrastructure necessary to handle the player volume they have is not only expensive, but requires a ton of expertise to be done correctly, AND requires lots individual geographically discrete locations to keep latency down.
The fear for them would be investing in all that infrastructure just for the game to fall off in popularity after a few years.
No one in their right mind would deploy own servers for this kind of load. It fluctuate way too much and in half a year you have unused servers that are junk. Initial purchase price would be millions, and setup would take months.
They are definately running in some cloud, and 500k/month is about what you would expect to host servers for a popular game like this in close to launch.
I don't particularly like the either or approach. You can certainly spin up some minimum on local hardware. You have some up front capex but something that doesn't have a fluctuating, expensive monthly opex bill.
You can then use cloud architecture to add capacity resources on demand and in different geographic locations. You can also utilize multiple cloud architectures to further add redundancy and cost optimization.
If you build out the scripts used to dynamically scale to also pull current pricing, you can have something that is both heavily redundant and somewhat cost effective. Sure it's not like azure, AWS, Google cloud, or any other public cloud option changes their pricing that frequently, but it would give a good way to compare specifically in different regions.
For a game like this, building capacity and the ability to scale early was clearly more important than optimizations in the server code base. 500k/mo isn't actually a lot to companies and it's likely to go down as optimizations are implemented and popularity stabilizes.
Main problem with game like this, is that you are probably not going to have it running more than 6 months with heavy loads, after that you can scale everything down.
If you have a business that is going to run 10-20 years, you can build complex solutions to optimize the cost.
In this kind of rocket like need of global computing power, the cloud is only real solution.
Oh yea. Though I don't feel that utilizing different public cloud options should incur significant additional development time, at least not if it was something they considered during the development of the game.
It can also go the opposite way, moving from cloud to on premise as things stabilize and they want the more stable, consistent costs decreasing opex and spending more capex and have done optimizations to better determine the hardware they need so they don't over buy.
It's entirely possible they have some private servers from the development of the game that they used cloud to augment.
No matter how it was architected, right now it's primarily in a public cloud of some sort.