Twitch Announces Closure of South Korean Services Due to Skyrocketing Network Fees

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Twitch Announces Closure of South Korean Services Due to Skyrocketing Network Fees

December 07
22:09 2023

Seoul, South Korea – Twitch, the widely recognized American internet gaming broadcasting platform, will cease its operations in South Korea starting in February of the coming year. This decision comes after seven years of providing gaming content to South Korean audiences. The primary reason behind Twitch’s withdrawal from the market is the astronomical rise in network fees, rendering continued operations financially unsustainable.

In an official statement issued by Twitch’s CEO, Dan Clancy, on December 6, 2023, it was revealed that the cost of maintaining Twitch’s presence in South Korea had reached unsustainable levels. Despite previous efforts to mitigate these expenses by adjusting streaming quality, the network fees in South Korea stood out as the primary obstacle. These fees were reported to be ten times higher than those in most other countries, putting immense pressure on the platform’s financial viability.

South Korean users will no longer have access to Twitch’s premium products and services. This discontinuation will have a significant impact on South Korean content creators, known as streamers, who will face challenges in monetizing their content. Recognizing the gravity of this transition, Twitch has committed to supporting streamers and the community in finding alternative platforms such as AfreecaTV and YouTube. Twitch plans to facilitate this transition by providing links to these alternative services within its platform.

During a live Twitch broadcast on the same day, CEO Dan Clancy emphasized the detrimental consequences of escalating network fees in the South Korean market. He pointed out that as the user base expanded, so did the losses incurred due to network costs. While exploring possible solutions, including reducing video quality to 480p within South Korea and investigating international service options, Clancy expressed reservations about these alternatives. He cited potential delays and regulatory challenges that could hinder a seamless transition.

This decision comes after a series of prior measures taken by Twitch to limit its services in South Korea due to concerns over network fees. These measures included reducing the maximum video resolution from 1080p to 720p in September of the preceding year and discontinuing video-on-demand (VOD) features in November.

The term “network fees” refers to charges imposed on content providers (CPs), such as YouTube and Netflix, for using the internet infrastructure provided by domestic telecommunications companies. Telecommunications providers argue that CPs must pay these fees to cope with the surging demand for network traffic. However, global CPs, like Google, which dominates network traffic in South Korea, have faced criticism for not adhering to these fees, raising concerns about fair competition. Google has launched a ‘net neutrality protection’ campaign on YouTube to advocate for network neutrality, promoting the equal treatment of all internet traffic by internet service providers.

In April 2020, Netflix and SK Broadband were involved in a legal dispute over network fees. Netflix contended that charging both end-users and CPs constituted ‘double billing’ and initiated legal proceedings to confirm the non-existence of this obligation. Nevertheless, in September, both parties reached an agreement to withdraw the lawsuit.

Twitch’s exit from South Korea highlights the ongoing debate surrounding network fees and their impact on the digital content industry in the country. The withdrawal of a major player like Twitch will undoubtedly reshape the landscape for both content creators and consumers in South Korea.

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