Popular Streaming Service To Shut Down In South Korea

In a shocking update posted by Dan Clancy, Twitch CEO, on December 5, it has been revealed that they are shutting down the Twitch business in Korea on February 27, 2024. They are suspending operations in the country due to high network fees. Since these fees are about 10x higher than other countries, it’s too expensive for the business to continue operating there and thereby unsustainable for the company to continue running its service in Korea.

Twitch Shutting Down in February 2024

Here are a few factors behind this disappointing news:

The High Network Fees are due to a special system, unique to South Korea. In the country, Internet Service Providers (ISPs) charge extra fees to foreign content providers based on the amount of bandwidth used. Since Twitch has to follow this rule, the fees end up becoming much higher than other countries. In the blog post, they have mentioned that the the cost to operate Twitch in Korea is ‘prohibitively expensive’.

This comes after South Korea introduced the Sending Party Network Pays (SPNP) law in 2016, which is also called the internet traffic tax. It is where companies (like Twitch or even Netflix) pay prices to have their services delivered to customers.” This has had significant impact on Twitch, because it is the “sender of data” to Korean users and has to pay high fees.

They have even tried to reduce costs by experimenting with cost cutting measures like peer-to-peer model for stream delivery or capping the stream source quality to 720p. While these changes did lower their costs, the network fees in Korea are still 10x more expensive than in most other countries. Moreover, Twitch has been facing significant loss in Korea and so, the company decided that there was no way to operate sustainably there.

Source: Twitch

What happens next?

Twitch has detailed that they plan to help the community of Twitch streamers in Korea who have dedicated significant time and effort into building their communities and will help them find new homes even if it’s not on Twitch. They will work to help them move to alternative livestreaming services by reaching out to these services to help with the migration to other platforms (such as YouTube, Afreeca TV, etc).

Korea has been a force to be reckoned with in the eSports community and while this was a unique scenario and a difficult decision, it’s highly saddening for those loyal to Twitch. Ultimately, the decision to suspend operations in Korea was a tough one for the company but had to be done due to the unsustainable business model.