Twitch Abruptly Withdraws from Korean Market... Competition to Attract Streamers Intensifies

Twitch to Withdraw in February Next Year "Due to Network Usage Fees"
Overheated Competition to Attract Streamers... Unclear Utilization
International Interest... Beneficiaries Include AfreecaTV

Dan Clancy, CEO of Twitch, is explaining the reason for the business withdrawal during a streaming broadcast chat on the 6th. Photo by Twitch

"Network fees in Korea are ten times higher than in other countries." Twitch, a dominant player in the streaming market, abruptly announced its withdrawal from the Korean market, citing the burden of network usage fees. Intense behind-the-scenes competition is expected among domestic and international platforms to attract streamers who have lost their longtime home.

Claims of Network Fee Burden... Utilization Likely Ambiguous

On the 6th, Twitch Korea announced on its official blog that "we have decided to cease Twitch operations in Korea as of February 27, 2024," adding, "After this date, Korean viewers will no longer be able to purchase Twitch paid products, and streamers will not be able to generate revenue through Twitch."

The publicly stated reason by Twitch is the excessive cost due to network usage fees. The company said, "The operational costs in Korea are at a seriously high level," and "We tested a P2P model related to video quality and subsequently adjusted the maximum quality to 720p." It added, "Although costs were somewhat reduced, the network fees in Korea, which are ten times higher than in other countries, made operation impossible."

Twitch has openly criticized network usage fees in Korea since 2022. In October last year, Twitch limited the maximum resolution of domestic viewing quality from 1080p to 720p, citing the burden of network fees. In November of the same year, it also discontinued its video-on-demand (VOD) service. Twitch, which had rapidly grown since entering the Korean market in 2015 by providing ultra-high-definition 4K resolution services, saw streamer departures triggered by the sudden quality restrictions. Earlier this year, Jung Chan-yong, CEO of AfreecaTV, said during a live broadcast combined with a performance announcement, "The number of BJs who moved from Twitch to AfreecaTV is not just dozens but in the hundreds."

Market analysis suggests that besides network fees, intensified competition to attract streamers and concerns about utilization also played a role. For example, Coupang operates its video streaming service ‘Coupang Play’ free of charge for Wow Membership members while covering traffic costs. Domestic companies like AfreecaTV and other domestic and international platforms also bear all costs. An IT industry insider hinted, "Amazon, Twitch’s parent company, uses Twitch in the process of attracting ‘Amazon Prime’ memberships, but this is difficult to utilize in the Korean market, which likely caused strategic concerns."

YouTube Live, AfreecaTV, Naver, and Others to Benefit

Competition over Twitch’s vacant spot is expected to intensify. AfreecaTV, PopcornTV, domestic companies, and U.S.-based platforms like YouTube Live and Kick are emerging as alternatives. Naver is also planning to launch a new game streaming service called Chijijik (CHZZK, tentative name) next year. Recently, it started a closed beta test (CBT) service for internal employees. On the 19th, it plans to begin an open beta test (OTB) service targeting game streamers. It is known that future plans include offering full HD 1080p quality options and replay functions.

The game streaming market continues to grow even after the COVID-19 pandemic. According to the Stream Hatchet report, a specialized streaming data analysis agency, the global game streaming market viewers reached 7.6 billion in the third quarter of this year, approaching the record high of the third quarter of 2020. Twitch holds 53% of this share, YouTube 40%, and the remaining 7% is divided among Facebook, AfreecaTV, Kick, and others. Kim Ha-jung, a researcher at Daol Investment & Securities, noted in a recent report, "If Chijijik successfully recruits domestic Twitch streamers and secures user traffic, its business value will exceed 1 trillion won," adding, "Twitch’s estimated revenue in 2022 was 204.6 billion won."

Issue Overseas as Well... Korea’s Status as ‘LoL Homeland’

Twitch’s withdrawal from Korea is also a topic of debate overseas. Korea is the homeland of ‘League of Legends (LoL),’ the world’s number one professional gamer ‘Faker.’ On the morning of the 6th, a post on the online community Reddit received 3,900 likes and dislikes, with about 630 comments. One netizen pointed out, "Korea’s e-sports market, especially the LoL market, is very large, but Twitch has cut it all off." Many posts inquire about the whereabouts of Korean streamers. Another netizen supported Twitch’s claim, saying, "Korea’s internet regulations are excessive. Due to monopolies by telecom companies, excessive costs occur."

A domestic internet industry official said, "Based on Twitch’s actions so far, it seems they are genuinely trying to scale down operations, not just pretending," adding, "This was largely anticipated in the industry, but we need to watch the impact this market withdrawal will have on the industry."

The market’s focus is on the whereabouts of famous streamers. Twitch also plans to focus on helping streamers transition. Naver is also considering streamer platform transfer events along with customer promotions. Twitch stated on its blog, "We recognize how important it is for streamers and communities to find new homes such as AfreecaTV and YouTube," adding, "We plan to support posting links within the service’s notification function to facilitate smooth transitions to other services." Dan Clancy, CEO, also responded to a question about Naver Chijijik during a live chat that morning, saying, "There will be another option for broadcasters," and "If necessary, we are willing to cooperate with Naver."