Amazon’s streaming platform, Twitch, has announced its decision to end its operations in South Korea by February 2024, due to the considerable financial challenges posed by high operating costs and inflated network fees in the country.
Twitch’s CEO, Dan Clancy, expressed the company’s inability to find a sustainable business model in Korea, citing persistent losses. He revealed that network fees in the country are ten times higher than those in most other nations, despite the company’s efforts to reduce operating costs.
South Korea’s Ministry of Science and ICT has issued a statement acknowledging the ongoing review of network usage fees, due to the need to consider the sustainable development of the internet network, content industry, and user convenience. However, the ministry refrained from commenting directly on Twitch’s decision to cease operations.
The debate over responsibility for increased network traffic costs has been a contentious issue, leading to clashes between global technology giants and local internet providers in South Korea. Earlier this year, a similar dispute between Netflix and SK Broadband, a South Korean internet service provider, was resolved with the withdrawal of lawsuits related to network usage fees.
In response to growing operating costs, Twitch had already taken measures in 2022, limiting video resolution in South Korea. This decision raised concerns, particularly in a country known for its flourishing esports scene and widespread use of online video games.
Following Twitch’s announcement, shares of Afreeca TV, a South Korean streaming platform and a direct competitor, surged nearly 30 percent last Wednesday.
Twitch has faced its own set of challenges recently, as reflected in the layoff of over 400 employees in March due to unmet user and revenue growth expectations. The decision to exit the South Korean market appears to be part of a broader strategy to address financial concerns and refocus the platform’s operations.
