Twitch to Shutdown South Korea Operations in 2024 Due to High Network Fees
Amazon-owned streaming platform Twitch announced its decision today to shut down operations in South Korea from February 27, 2024
Amazon-owned streaming platform Twitch announced its decision today to shut down its operations in South Korea from February 27, 2024. According to the platform, the primary factors driving this decision are the exorbitant operating costs and network fees.
“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,” said Dan Clancy, CEO of Twitch.
Twitch’s Clancy pointed out that network fees in Korea are still 10 times higher than in most other countries. Despite considerable efforts to mitigate operational expenses and maintain business operations, the company finds itself confronted with a financial landscape that impedes its ability to continue operations in Korea.
In March 2023, Emmett Shear, the co-founder and sole CEO of Twitch since its inception 16 years ago, resigned from his leadership role to join OpenAI. However, he cited the desire to dedicate more time to his family as the driving force behind this notable transition in Twitch’s leadership.
The same month, Twitch had “laid off more than 400 employees” after its user and revenue growth did not meet expectations.
Twitch faced sustained scrutiny over issues ranging from creator payment splits to targeted harassment and streamers capitalizing on activities like gambling. The platform drew considerable backlash from creators last year when it revealed the discontinuation of special 70/30 revenue splits for top performers.
At the time, Twitch attributed the adjustment to increased fees imposed by Amazon Web Services, its parent company’s and a player in cloud computing. This decision fueled discontent among creators and raised broader questions about the platform’s policies and financial dynamics.
South Korea’s High Network Fees a Major Concern
Unlike many other countries, South Korea allows Internet service providers to charge data-heavy companies extra fees. Legal conflicts between South Korea and the US streaming giant Netflix regarding network usage fees have recently concluded.
In September, Netflix and SK Broadband, a major South Korean Internet service provider, revealed their decision to end a series of lawsuits related to network usage fees.
The disagreements primarily revolved around the question of whether Netflix should bear the expenses associated with increased network traffic and maintenance efforts. However, the two entities have opted for a collaborative partnership for the future.
According to the platform, it has “put a lot of effort into finding ways to continue operating in South Korea by reducing costs”, such as adjusting the maximum video quality — but it is no longer financially viable.
“We would like to reiterate that this was a very difficult decision, and one that all of us at Twitch are deeply saddened by,” the company said in a statement on Wednesday.
Various Korean media houses reported that shares in Afreeca TV, a prominent South Korean video streaming service and a competitor to Twitch, experienced a surge of nearly 30% in afternoon trading on the Seoul stock exchange.
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