24th February 2024 11:49 am
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Twitch says operating in South Korea is no longer financially viable

  • Twitch will no longer allow livestreaming or purchases from creators and viewers in South Korea from 27th February 2024.
  • Dan Clancy, Twitch’s chief executive officer, says that the cost of operating in South Korea is 10 times more expensive than in most countries.
  • This is due to South Korea’s network usage fees where platforms need to pay Korean ISPs for the data transmitted over their network.

The premier destination for viewers looking to watch live gaming, Twitch, has announced that it will be exiting the South Korean market early next year.

Early on Wednesday morning (or late on Tuesday evening in the US) Daniel Clancy, chief executive officer at Twitch, announced that on 27th February 2024, Twitch will no longer be operating in South Korea.

“Ultimately, the cost to operate Twitch in Korea is prohibitively expensive and we have spent significant effort working to reduce these costs so that we could find a way for the Twitch business to remain in Korea. First, we experimented with a peer-to-peer model for source quality. Then, we adjusted source quality to a maximum of 720p. While we have lowered costs from these efforts, our network fees in Korea are still 10 times more expensive than in most other countries. 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,” Clancy wrote.

The cost of operating in South Korea is inflated by network usage fees where platform operators need to pay internet service providers for the traffic that runs over their network. In the case of Twitch which is streaming high-quality video, live, these costs have surely climbed to untenable heights.

According to Clancy, the situation in South Korea is unique. Of course, if other countries adopt similar rules Twitch will face similar issues.

In an article in Twitch’s Help Centre, the platform notes that as a result of this decision, it’s waiving the simulcast rule, but only for streamers in South Korea. Starting today, anybody who signs up for the Twitch Affiliate and Partner program won’t be able to select South Korea as their country of residence. From February however, viewers in South Korea won’t be able to make purchases on Twitch.

“I want to reiterate that this was a very difficult decision and one we are very disappointed we had to make. Korea has always and will continue to play a special role in the international esports community and we are incredibly grateful for the communities they built on Twitch,” said Clancy.

IRLToolkit, which offers tools for streamers who want to host IRL streams, has said that it will continue to operate and allow streamers to go live from South Korea.

“If you’re a streamer in Korea and use our service, your stream enters Twitch’s servers in the USA regardless of where you actually are,” the makers of the tool said in a post on X, formerly Twitter. However, the makers also note that monetisation will likely be affected given that subscriptions would be handled by Twitch, and without support for South Korea, viewers in the region won’t be able to subscribe.

The fact of the matter is that South Korea’s laws make it financially untenable for Twitch to operate in the country.

We’d be curious to see what happens should more countries adopt similar policies to those in South Korea. While we quite enjoy Twitch and other US-based entertainment platforms, the fact that these services make massive profits in other countries, potentially undermining local solutions can become problematic.

It’s unclear at this stage if other streaming platforms are planning an exit from the South Korean market. If they aren’t, Twitch’s exit smells like an opportunity to capitalise.

Brendyn Lotz

Brendyn Lotz

Beats include cybersecurity, business, infrastructure, telecommunications, PC gaming and internet culture.

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