Twitch, the popular video streaming service, plans to shut down its operations in South Korea on February 27 after finding it “prohibitively expensive” to operate in one of the world’s largest esports markets.
Twitch CEO Dan Clancy said the company made “significant effort” to lower the network’s cost to operate in Korea, but ultimately operating fees in the East Asian nation were still 10 times more expensive than ,what in most other countries. The suspension of operations in Korea is a “unique situation,” he wrote in a suspension.
South Korea’s expensive internet charges have led to legal battles – streaming giant Netflix unsuccessfully sued a local broadband provider last year to avoid paying usage fees, but a Seoul court ruled that Netflix must contribute to the network’s costs, allowing his half billion dollar Korean business.
Twitch tried to reduce its network costs by experimenting with a peer-to-peer model and then downgrading the stream quality to 720p video resolution, Clancy said. While these efforts helped the company reduce its network costs, they weren’t enough. The Amazon-owned streaming service said it was operating in Korea at a “significant loss” and that there was “no way forward” to sustainably operate the business in the country.
“I want to reiterate that this was a very difficult decision and we are very disappointed that we had to make it. 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 have built on Twitch,” Clancy wrote.
Esports is huge in South Korea, with professional gaming a cultural phenomenon and top players enjoying celebrity status. More than half of the country’s 50 million population are esports fans. South Korea dominates competitive gaming worldwide, especially in titles like Starcraft and League of Legends, hosting several major tournaments annually. Twitch had amassed millions of users in South Korea, which was also one of the popular markets for the streaming service.
Like South Korea, telecom operators in many other markets are beginning to push for content providers to pay for network costs. Telecom operators in India, the second-largest wireless market, earlier this year recommended that internet companies compensate them for using the networks. Network operators in India cited the regulatory changes in Korea as one of their inspirations.
