Twitch To End Operations in South Korea: What Led to It and Why It Matters

The company was taking significant losses operating in the country while paying network fees around 10 times higher in most other countries.

After over a year of trying to work out its operations in South Korea, popular streaming platform Twitch has announced that it will be exiting the market on February 27, 2024, citing rising operational costs to operate the service in the country.

Twitch's Actions

In a blog post posted by Twitch CEO Dan Clancy, it had stated that due to network fees being much higher in South Korea, the company was taking significant losses operating in the country while paying network fees around 10 times higher in most other countries.

Following this, Twitch has stated the following:

  • Users in South Korea will no longer be able to purchase Twitch's paid products and streamers will no longer be able to generate revenue through Twitch.
  • The platform will be sending out support for all affected streamers to utilize its onsite message feature to allow streamers to cross-promote their other platforms.
  • Twitch is planning to discuss with rival companies like South Korean streaming platform AfreecaTV and video platform YouTube to discuss how they can help in accepting newly-transferred creators and its community to their respective platforms.
I would like to reiterate that this was a very difficult and difficult decision, and one that all of us at Twitch are deeply saddened by. Korea has always been a stellar player in the global esports community and will continue to do so. We'd like to thank you all for your hard work building a great Twitch community.

In a separate post on X (Twitter), Clancy said that this was a difficult decision they made that got delayed for a long time, and that they are aware of the huge impact this will have on the affected creators in the country.

So, What Does It All Lead To?

It is worth to understand that Twitch's exit to South Korea is not only due to their decision but rather due to government regulations concerning network usage by technology companies operating in South Korea. VTuber NewsDrop has documented this matter previously back in October 2022.

The bill, which encompasses network usage and internet traffic tax, implies that companies would need to pay a 'network fee' to internet service providers (ISPs) depending on how much internet traffic they generate.

  • In a bid to minimize the cost of operation back then, Twitch decided last year that they would downgrade the video quality of the streams to a maximum of 720p.

The controversial nature of said bill came into light when popular streaming platform Netflix was sued by ISP giant SK Broadband over its traffic surge brought by the popular show Squid Game. Despite both parties now ending their three-year legal battle over a new strategic partnership, other entities are showing concern over this regulation.

  • YouTube has long been vocal against this regulation, and has threatened to cut down its investment in South Korean should the bill pass through legislation.
  • A policy paper by the Information Technology Industry Council (ITI) and the Internet and Competitive Networks Association (INCOMPAS) notes as network fees erect barriers to consumer choice and competition across content providers (CPs), the government should acknowledge the investments CPs have in the local market and work together alongside ISPs to lower down costs and foster competition in the supply chain.
  • A survey by the the non-government organization Open Network earlier this March found that 4 out of 10 South Koreans opposed the bill, with 43.7% of the survey's respondents sharing said sentiment. It is worth noting, however, that the same survey noted that 51.6% of respondents have agreed that it was unfair that foreign content providers, such as Netflix and Google, have not paid network usage fees.

Why This Matters?

Twitch is the most popular streaming platform in South Korea, surpassing local player AfreecaTV. Data from Statista notes that Twitch boasted around one million daily active users (DAU) in South Korea in 2022, while AfreecaTV had reached around 400 thousand DAU at the same time.

Considering that South Korea is the "esports capital of the world", many are wondering how would this affect many esports streamers who rely on Twitch and it long-built community. In a post on X (Twitter), esports personality LS noted that Twitch has been successful in expanding in South Korea in its starting days back when AfreecaTV dominated, and where most local esports players have started streaming back then.

My heart breaks for many of the Korean creators who managed to find so much success on this platform and the communities they built. While some will likely be okay after switching to YouTube or back to Afreeca or something else, this is still so scary for them.

This change affects VTubers such as Senz who has a Korean fanbase, and feviknight who is based in the country and is streaming on the said platform.

Insight From a Twitch Streamer Who's Deep into the VTuber Culture

We also reached out to Hwikky, a Twitch streamer based in Korea who is notable for his vlogs about VTuber culture and related events. He will also be affected by the platform's shutdown.

He has shared with NewsDrop his thoughts on the matter, which also fall in place with what has been reported earlier:

"For me, I stream mostly to international audience in English, so I will probably stream on my game channel hwikkyGG. I already have been simulcasting on Twitch and YouTube though, because I was expecting this to happen, especially since Twitch's prior decision to cap streams in Korea to 720p. My thoughts can change though, so we will see."

However, it is through his insight that we are made aware of a third player who is set to replace Twitch as soon as it departs the country.

Naver (LINE, Webtoon) will launch its own platform, tentatively called CHZZK. Hwikky told us that it is already known to be contacting several big-name Korean streamers.

The Korea Times reports that Naver began hosting a closed beta test of the CHZZK platform by broadcasting StarCraft and League of Legends game tournament among its 380 participating employees set to end December 8, Friday.

A Naver spokesperson said that they have plans to launch the open beta test Tuesday, December 19.