Twitch, the renowned live-streaming platform, made the groundbreaking announcement that it’s closing its doors in South Korea on February 27, 2024.
As revealed by Twitch CEO Dan Clancy, this decision is fueled by the staggering operational costs unique to the Korean market. Dan Clancy, the CEO of Twitch, lamented the difficult decision, stating, “The cost to operate Twitch in Korea is prohibitively expensive.”
The company tried various measures to cut costs, including a peer-to-peer model and capping video quality at 720p. However, these efforts were dwarfed by network fees in Korea, which are “still 10 times more expensive than in most other countries.”
This move isn’t just about Twitch recalibrating its global strategy; it reflects a broader issue plaguing international IT companies in South Korea. High network costs have been a significant barrier, not just for Twitch but for other giants like Netflix. These companies have struggled with South Korea’s unique regulatory framework and network fee structures.
For the Korean streaming community and the esports sector, this is more than just corporate news. Twitch’s shutdown signifies the end of an era for many Korean streamers who invested time and effort in building their presence on the platform.
Twitch recognizes this and plans to aid these streamers in transitioning to alternative streaming services in Korea. “We plan to help these communities find new homes,” Clancy expressed, acknowledging the impact on the vibrant streaming communities they nurtured.
The ripples of this decision were felt immediately in the market, with Afreeca TV, a local streaming competitor, seeing a nearly 30% surge in its shares. This indicates a potential shift in the streaming landscape in South Korea.
Twitch’s exit from South Korea is a telling example of the challenges digital platforms face in different international markets. It underscores the need for adapting business strategies to align with local contexts and regulatory environments.
As the streaming world continues to evolve, this development marks a significant moment in the history of digital entertainment, particularly in the esports and gaming communities.