Twitch Ceases Operations in South Korea Due to Soaring Network Fees
Twitch, has announced its decision to terminate its services in South Korea starting in February next year. This move comes after seven years of operation in the country, with Twitch citing the burden of network fees as the primary reason for the withdrawal.
In an official statement released on December 6, 20XX, Twitch’s CEO, Dan Clancy, explained that the cost of operating Twitch in South Korea had reached an unsustainable level. Despite efforts to reduce costs by adjusting streaming quality, South Korea’s network fees, which were ten times higher than those in most other countries, made continued operations unviable.
As a result of this decision, South Korean users will be unable to purchase Twitch’s premium products and services after February 27, 20XX. Additionally, South Korean streamers will face challenges in generating revenue from their content. Twitch has acknowledged the importance of helping streamers and the community find alternative platforms such as AfreecaTV and YouTube and plans to facilitate this transition by posting links to new services within its platform.
CEO Dan Clancy, speaking during a Twitch broadcast on the same day, emphasized the impact of rising network fees on the South Korean market, noting that as the user base grew, so did the losses incurred due to network costs. While considering lowering video quality to 480p within South Korea and exploring international service options, he expressed doubts about these alternatives’ viability, citing potential delays and regulatory issues.
Twitch had previously limited its services in South Korea due to network fee concerns, reducing the maximum video resolution from 1080p to 720p in September the previous year and discontinuing video-on-demand (VOD) features in November.
Network fees refer to charges paid by content providers (CPs), such as YouTube and Netflix, for using the internet infrastructure created by domestic telecommunications companies. Telecommunications providers argue that CPs must pay these fees to handle the surging traffic demands. However, global CPs like Google, which dominates Korea’s network traffic, have faced criticism for not paying such fees, leading to concerns about fairness in competition. Google has been running a ‘net neutrality protection’ campaign on YouTube to advocate for network neutrality. Net neutrality principles require that internet service providers treat all internet traffic equally without discrimination.
Netflix and SK Broadband were involved in a legal dispute over network fees starting in April 2020. Netflix argued that charging both end-users and CPs constituted ‘double billing’ and filed a lawsuit for confirmation of non-existence of obligation. However, the two companies reached an agreement in September to withdraw the lawsuit.