Twitch to shut down in Korea over ‘prohibitively expensive’ network fees. As a result of discovering that operating in South Korea, one of the world’s most significant esports marketplaces, is “prohibitively expensive,” the popular video streaming service Twitch has decided to shut down its operations in South Korea on February 27.
Dan Clancy, the CEO of Twitch, stated that the company made a “significant effort” to lower the network expenses to operate in Korea, but, in the end, the fees to operate in the East Asian nation were still ten times more expensive than in the majority of other nations. In a blog post, he described the situation as “unique,” referring to the fact that we have stopped operations in Korea.
Streaming giant Netflix attempted to avoid paying use charges by filing a lawsuit against a local broadband provider last year. However, Seoul’s court determined that Netflix must contribute to the network expenses that enable its half-billion-dollar Korean operation. The pricey internet prices in South Korea have led to legal battles.
According to Clancy, Twitch tried to reduce its network expenses by experimenting with a peer-to-peer architecture and then reducing the broadcast quality to 720p video resolution. The company was able to reduce its network expenditures due to these efforts; nonetheless, this was not sufficient. The streaming service that Amazon owns stated that it has been operating in Korea at a “significant loss” and that there was “no pathway forward” to run the business sustainably in the nation.
I want to emphasize again that this was a very challenging choice and that we are dissatisfied that we were forced to make it. Clancy, “Korea has always played a special role in the international esports community and will continue to do so in the future. We are extremely grateful for the communities that they built on Twitch.”
With professional gaming becoming a cultural phenomenon and top players having celebrity status, esports has become a significant industry in South Korea. Esports fans make up more than half of the country’s population of fifty million people. South Korea is the dominant player in competitive gaming worldwide, particularly in games such as League of Legends and Starcraft, and it hosts many big tournaments every year. The streaming website Twitch has collected millions of subscribers in South Korea, which is also one of the most popular regions for the service.
While South Korean telecom operators are beginning to press content providers to pay for network costs, operators in many other regions are doing the same. At the beginning of this year, telecom providers in India, the second-largest cellular market, suggested that internet businesses reimburse them for utilizing the networks. India’s network providers have acknowledged the regulatory shifts that have taken place in Korea as one of their sources of inspiration.
