Twitch Announces Closure in Korea Due to Exorbitant Network Costs

Twitch, a renowned video streaming platform, has announced its decision to cease operations in South Korea effective February 27, due to the exorbitant costs of maintaining its network in one of the world's premier esports hubs.

Twitch’s CEO delivers details

Dan Clancy, Twitch's CEO, detailed the company's extensive efforts to mitigate the high network fees in South Korea in a recent blog post. Despite these measures, the costs of operating in South Korea remained disproportionately high, approximately tenfold compared to other countries. Clancy described the situation as unique and lamented the necessity of this decision.

High-cost of internet services in Korea

In South Korea, the high cost of internet services has previously sparked legal battles. Notably, Netflix engaged in an unsuccessful legal dispute last year with a Korean broadband provider to avoid network usage fees. The court in Seoul ruled in favor of the broadband provider, mandating Netflix to contribute to the network expenses that support its lucrative Korean operations.

Twitch experimented with various strategies to reduce its network expenses, including implementing a peer-to-peer model and reducing the streaming quality to 720p resolution. While these efforts somewhat lessened the financial burden, they were insufficient to sustain operations. The Amazon-owned service acknowledged that it had been operating at a significant loss in Korea and saw no viable way to continue its business there sustainably.

CEO explained the regret behind the decision

Clancy expressed deep regret over the decision, acknowledging Korea's vital role in the global esports landscape and its robust Twitch community. eSports is a cultural mainstay in South Korea, with a substantial portion of its 50 million population being esports enthusiasts. The country is a global leader in competitive gaming, particularly in games like Starcraft and League of Legends, and hosts numerous significant tournaments each year. Twitch had developed a substantial user base in South Korea, making it one of its most active markets.

This situation in South Korea reflects a growing trend where telecom operators worldwide are increasingly urging content providers to bear network costs. In India, the second-largest wireless market, telecom companies have recently proposed that internet companies should compensate for network usage, citing the regulatory shifts in Korea as a precedent.