Twitch to Pull Out of South Korean Market Citing Expensive Network Fees

         

Twitch, a popular video service, is halting its operations in South Korea due to high network fees, leading to a decline in video quality and user complaints.

Twitch’s Decision to Leave South Korea

Twitch, the popular video service, has announced its decision to shut down its operations in South Korea due to what its CEO, Dan Clancy, called ‘prohibitively expensive’ network fees. Clancy mentioned that the network fees in South Korea were 10 times higher than in most other markets, leading to the difficult decision to withdraw from the country on Feb. 27, 2024.

Impact on Users and Competition

In an effort to reduce costs, Twitch downgraded the video quality in South Korea from 1080p to 720p in September 2022, which was met with dissatisfaction from South Korean users. Additionally, South Korean streamers were blocked from uploading video-on-demand content, prompting many users to switch to alternative platforms such as YouTube and local streaming sites like Afreeca TV. Furthermore, the competition in the South Korean market was expected to intensify with the reported plans of Naver, the largest domestic internet company, to launch live streaming services for online video game leagues.

Challenges Faced by Twitch

The decision to withdraw from South Korea reflects the ongoing challenges faced by Twitch, as the company had previously announced layoffs and expressed concerns about its user and revenue growth. According to Clancy, Twitch had been operating at a substantial loss in Korea, making it untenable to continue business operations in the country.

Network Fee Disputes

The withdrawal from South Korea also sheds light on the disputes between global content providers and South Korean telecommunications companies regarding network fees. There have been ongoing conflicts involving companies like Netflix, Google, and South Korean internet providers over the high charges for network usage. However, the specific details of these negotiations, including the fees and settlements, are often confidential.

Industry Response

Jung Sang-wook, an official from the Korea Telecommunications Operators Association, expressed skepticism about Twitch’s claims regarding network fees, suggesting that the decision could be influenced by broader management issues rather than just the costs. The association had previously criticized Twitch for reducing video resolution, stating that it led to complaints from users to telecoms providers.

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