Twitch, the popular live video streaming service, announced that the company is shutting down its South Korean business, citing “prohibitively” high operating costs in the country.
Twitch’s CEO, Dan Clancy, said it will completely exit South Korea on February 27th, 2024, saying it can no longer support working at a loss due to high network fees.
The exit of a major video streaming platform will be a blow to South Korea’s video game streaming community, with the country having one of the largest esports markets in the world. Half of the nation’s population considers themselves fans.
“While we have lowered costs from these efforts, our network fees in Korea are still ten times more expensive than in most other countries. Twitch has been operating in Korea at a significant loss, and unfortunately, there is no pathway forward for our business to run more sustainably in that country,” Clancy said.
To minimize costs, Twitch reduced the maximum content quality to 720p, which led to users migrating to YouTube instead, degrading Twitch’s standing in the market.
Twitch jumped to calm down streamers in other countries, saying the developments in South Korea are “unique,” as operating costs in Korea are “significantly higher than they are in other countries.”
Meanwhile, the company said it will help Twitch streamers relocate to other platforms and find alternative streaming services in Korea.
“Korea has always and will continue to play a special role in the international esports community, and we are incredibly grateful for the communities they built on Twitch,” reads Clancy’s statement.
Twitch finds that operating in South Korea is more expensive than elsewhere because the country employs “network use fees,” allowing internet service providers (ISPs) to charge foreign service providers such as Twitch, Netflix, or YouTube for using the country’s networks.
Meanwhile, ISPs claim they are burdened with all the costs of maintaining and updating the infrastructure, while it’s used by companies that contribute nothing to maintaining it.
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