'Network Usage Fee Conflict' Twitch Benefits from AfreecaTV... 5 Consecutive Days of Growth

[Asia Economy Reporter Myunghwan Lee] AfricaTV is enjoying a 'windfall' effect amid the standoff between domestic Internet Service Providers (ISPs) and global Content Providers (CPs) over network usage fees. This is because competing companies have lowered their highest streaming quality citing the burden of network usage fees, leading to expected indirect benefits for AfricaTV.

On the 6th, AfricaTV closed trading at 75,700 KRW, up 4.27% (3,100 KRW) from the previous trading day, continuing its upward trend for five consecutive trading days. Earlier, on the 4th, AfricaTV saw a sharp rise of 10.69% in just one day.

With this rise, AfricaTV's stock price increased by 23.09% over five trading days. Just a week ago, at the end of last month, AfricaTV's stock price had fallen to the low 60,000 KRW range, experiencing sluggish performance. At that time, concerns over earnings arose as the number of paying users (PU) and the average charge per user decreased, resulting in a weak stock trend. The recent surge has allowed AfricaTV to fully recover the losses within four trading days and continue to rise further.

AfricaTV's upward trend appears to be influenced by Twitch, the global game streaming platform, which suddenly restricted the highest live broadcast quality to HD (720p) exclusively in South Korea starting from the 30th of last month. As the competing platform lowered the streaming quality?a factor to which internet broadcasters are highly sensitive?expectations for indirect benefits have shifted toward AfricaTV. Previously, Twitch abruptly announced on the 29th of last month that it would reduce the maximum live broadcast quality from 1080p to 720p, citing increased costs such as network fees.

The background of Twitch's quality reduction measure lies in conflicts over network usage fees. Recently, the National Assembly has been pushing legislation to mandate payment of network usage fees, citing the massive traffic generated by overseas CPs. The amendment to the Telecommunications Business Act, which strengthens the grounds for demanding network usage fees from large-scale CPs, was first submitted in December 2020 by Assemblywoman Jeon Hye-sook of the Democratic Party and has since been proposed by both ruling and opposition parties. In response, global CPs such as YouTube have encouraged signature campaigns to block the bill and engaged in public opinion battles.

The securities industry has analyzed that AfricaTV will benefit indirectly from Twitch's recent move. Heo Ji-soo, a researcher at Daishin Securities, said, "As streamers and users migrate from Twitch, the number of paying users is expected to increase again," adding, "AfricaTV's high revenue-sharing rate also provides an incentive for internet broadcasters to switch platforms." Jung Ho-yoon, a researcher at Korea Investment & Securities, also predicted, "Although the quality reduction issue may not immediately benefit AfricaTV, if the situation prolongs, it could have a sufficiently positive impact."

There are also forecasts that user metrics will improve starting from the fourth quarter of this year. Researcher Jung said, "There are events such as the Qatar World Cup in the fourth quarter that could positively affect user metrics," advising, "Given that the valuation is currently at a bottom level, it is advisable to approach it from a buying perspective."