Streaming platform Twitch to exit S. Korea due to 'prohibitively expensive' network costs

[Courtesy of Twitch]

SEOUL -- One of the world's most popular online streaming platforms, Twitch, will exit South Korea in early 2024 due to extremely high network fees that are 10 times higher than in most countries, the streaming platform's CEO said through his blog.

Twitch, with about 140 million monthly active users as of August 2023, offers creative online spaces for content creators called streamers who mainly broadcast their content live. Fans can choose and access their favorite streamers' channels to watch video content and interact in real time. Fans can donate or pay for a subscription to a channel to watch premium content. Streamers can make millions of dollars from fans' donations and subscription fees.

Internet service providers or network companies charge network fees to online-based services that use Internet traffic to make a profit. Services that require a lot of data traffic focus on the development of encoding technology that will minimize the size of video and sound data while maintaining quality. Sometimes, streaming service operators limit the maximum resolution of streamed video files to save operating costs.

Through a statement uploaded onto a blog on December 6, Twitch CEO Dan Clancy said that the company decided to pull the plug on its business in South Korea after finding that operating costs in the country webbed with super-fast internet network "prohibitively expensive." Twitch will shut down its business in South Korea on February 27, 2024.

"Ultimately, the cost to operate Twitch in Korea is prohibitively expensive and we have spent significant effort working to reduce these costs so that we could find a way for the Twitch business to remain in Korea," Clancy said.

Twitch limited the maximum resolution of video content for South Korean customers to 1280x720 resolution (720p), normally known as widescreen HD, in September 2022 in an effort to reduce the total data traffic consumed in the country. The streaming platform also scrapped the video-on-demand (VOD) feature in November 2022.

According to Clancy, the reason Twitch is exiting the South Korean market is because the company finds it hard to afford network costs. "While we have lowered costs from these efforts, our network fees in Korea are still 10 times more expensive than in most other countries," the Twitch CEO said, adding: "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."

When Twitch pulls out of the South Korean market, streamers will not be able to make any profit through the platform. Customers will not be able to purchase any paid content on Twitch. Clancy said that Twitch is currently reaching out to some streaming service operators in South Korea so that South Korean Twitch streamers could move their communities to other services.

"I want to reiterate that this was a very difficult decision and one we are very disappointed we had to make. 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," Clancy said.