That'd be $1500/mo for 1,000,000 daily active users, right? (Which doesn't include infrastructure costs.) That doesn't sound prohibitively expensive...

You're off by 30x. It's $45,000 per month for 1 million DAU.

Here's an example from the horse's mouth.

"10,000 DAU (10,000 / 1000) * $1.50 * 30 = $450"

http://aws.amazon.com/gamelift/pricing/

Ouch, yes: It's $1.50 PER DAY per 1000 daily active users. (I think everyone is so used to AWS prices being per month...)

It sounds completely reasonable to me ...

If you can't extract more that $1.50 a month from a 1000 active users then you should probably pack it in and try something else.

You also pay for the EC2 instances on top of that.

Which will be far more than $1.50/month to support that many users. I guess.

Can anyone with experience in game development give us a ballpark figure on how much this would cost if you were't tied to anything and just wanted to set up multiplayer infrastructure on your own?

It sounds cheap to me too, ends up costing you 9 cents per copy assuming all users who bought the game play multiplayer for 5 years.

The pricing is really good. The licensing terms are awful, but $1.50 for 1k daily active users is nothing.

Three use cases to consider.

Subscription-based games (eg. MMOs), averaging $11 / month. Worst case scenario (all your users are active daily), that's less than 0.02% of your income going to the engine.

Freemium/microtransaction games. Considering $1.50 is somewhere between 1/10th of a transaction to 10 microtransactions depending on the game, you need roughly an extra 1-100 microtransactions per 10k daily-active users to cover the cost. That's nothing.

Ad-based games... 1000 users should be worth more than $1.50. That's not gonna happen, why would you use this.