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2023-12-06 9:34 AM

Twitch’s Korean Exodus: Soaring Costs Force Shock Closure, Sending Shockwaves Through Global Esports Community

  • Prohibitively High Costs: Twitch announces closure of South Korean operations due to network fees 10 times higher than elsewhere.
  • Financial Unsustainability: Despite efforts to cut costs, Twitch reveals significant losses, leaving no viable path for continued operations.
  • Impact on Esports Community: Closure expected to reshape South Korean esports landscape, leaving creators and viewers in uncertainty.
By Lethabo Ntsoane

In a surprising turn of events, popular streaming platform Twitch has declared its intention to shutter its business operations in South Korea by February 27. The decision comes in the wake of insurmountable financial challenges, with Twitch CEO Dan Clancy revealing that operating in one of the world’s largest esports markets has become “prohibitively expensive.”

The Cost Conundrum: Network Fees 10 Times Higher in South Korea

Twitch, owned by tech giant Amazon, disclosed in a blog post that the network fees associated with operating in South Korea are a staggering 10 times higher than those in most other countries. Clancy acknowledged the company’s exhaustive efforts to reduce network costs, including experimenting with a peer-to-peer model for source quality and limiting source quality to a maximum of 720p. Despite these initiatives, the network fees in South Korea remained exorbitant, making the business unsustainable.

Cost Reduction EffortsOutcome
Peer-to-peer modelExperimented
Source quality adjustmentLimited to 720p

Operating at a Significant Loss: No Viable Path Forward

Twitch expressed that it has been operating in South Korea at a “significant loss,” and there is no foreseeable pathway to run the business sustainably in the country. The decision to cease operations is considered a unique situation, and Clancy conveyed the company’s disappointment at having to make such a challenging choice.

Regulatory Changes and Controversial Deliberations

The high network fees in South Korea might be linked to recent deliberations in the country regarding requiring tech companies to bear the costs of the network infrastructure. While Clancy did not delve into specifics, the mention of these deliberations suggests that regulatory changes could have contributed to the financial strain on Twitch in the region.

Impact on the Esports Community in South Korea

The closure of Twitch’s operations in South Korea is expected to have a notable impact on the local esports community, which has played a special role in the international esports scene. Twitch has been a pivotal platform for streaming and engaging with esports content, and its withdrawal from the South Korean market is likely to reshape the landscape for both content creators and viewers.

Closing Remarks

In his blog post, Clancy reiterated the difficulty of the decision and expressed Twitch’s gratitude for the communities that have been built on the platform in South Korea. The esports community, which has thrived on Twitch, now faces an uncertain future as the platform prepares to exit the South Korean market.

As the February 27 shutdown date approaches, South Korean Twitch users and esports enthusiasts are left grappling with the implications of this unexpected development in one of the world’s esports powerhouses.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo