Twitch says it’s withdrawing from the South Korean market over expensive network fees

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Twitch, a widely recognized video streaming platform, has declared its withdrawal from the South Korean market due to what its CEO, Dan Clancy, has termed as “prohibitively expensive” network fees. In a recent blog post outlining this decision, Clancy expressed that the fees paid by the company to South Korean internet operators were notably higher, approximately 10 times more, when compared to most other markets. Regrettably, specific numerical figures to support this assertion were not disclosed.

Dan Clancy further conveyed, “We’ve made the challenging choice to cease Twitch’s operations in Korea on the 27th of February, 2024.” Clancy noted that although Twitch had attempted to mitigate costs by reducing video quality, the network fees in Korea remained significantly elevated, standing at tenfold compared to most other countries.

Twitch, known for its popularity among video game enthusiasts, had previously downgraded its video services’ quality in South Korea from 1080p to 720p in September 2022, citing the imperative need to curtail expenses. Additionally, in the same year, South Korean streamers were restricted from uploading video-on-demand content, a decision that garnered strong disapproval from the South Korean user base and potentially prompted many to migrate to alternative platforms such as YouTube or South Korean streaming services like Afreeca TV.

The impending competition from Naver, the largest domestic internet company in South Korea, reportedly preparing to launch live streaming services for online video game leagues in the coming year, would likely have intensified the challenges for Twitch in the South Korean market.

This withdrawal from South Korea is the latest manifestation of Twitch’s business difficulties, with the company having previously announced layoffs of 400 employees in March, citing a misalignment between user and revenue growth and their expectations.

Clancy elaborated, “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.”

It’s noteworthy that South Korean telecommunications firms managing internet networks have been embroiled in disputes with global content providers, such as Network and Google, over exorbitant charges. These conflicts echo similar disputes between content providers and internet service providers in Europe.

In September, Netflix managed to resolve a legal dispute over network fees with SK Broadband, a South Korean internet provider, although the terms of their settlement were not publicly disclosed.

Jung Sang-wook, an official from the Korea Telecommunications Operators Association, an industry lobby comprising the country’s major telecommunications providers, expressed his inability to verify Clancy’s assertions about network fees, which are typically negotiated privately between companies under non-disclosure agreements. Jung also raised the possibility that Twitch’s decision may be rooted in broader management challenges, citing the profitability of similar services like Afreeca TV and asserting that Twitch’s video quality reduction had led to user complaints despite smooth service provision by telecoms providers.

Frequently Asked Questions (FAQs) about South Korea Twitch Withdrawal

More about South Korea Twitch Withdrawal

• Twitch’s Official Announcement
• Naver’s Plans for Live Streaming Services
• Twitch’s Previous Layoff Announcement
• Network Fee Disputes in South Korea
• Netflix and SK Broadband’s Dispute Resolution