Domestic Global Operators Have Lower Unit Prices Than Domestic Operators
Rewinding Abolishment: "No Relation to Network Usage Fees" Then Changed Statement
Most Twitch Streamers Considering Moving to Naver Streaming
The three major telecommunications companies responded to Twitch's reason for ending its Korean service?citing "network fees (network usage fees) in Korea that are 10 times higher than in other countries, making continued operation impossible"?by calling it a "nonsensical and baseless claim." Although the network usage fee contracts are conducted under non-disclosure agreements (NDAs) between the parties, so specific contract details cannot be disclosed, they argue that accusations of imposing excessive network usage fees on Twitch are unfounded. Network usage fees are charges paid by content providers (CPs) such as Twitch, YouTube, and Netflix to internet service providers (ISPs) for using the internet network created by the ISPs. Twitch plans to terminate its Korean service on February 27 next year.
Dan Clancy, Twitch CEO, announced the news of withdrawal from Korea through a broadcast [Photo by Twitch]
"Foreign companies are actually advantaged; an excuse for business failure"
Because network usage fee contracts are confidential, only the general level is publicly known, and specific contract details have never been disclosed. It is also unknown what the situation is like in other countries. However, in Korea, it has been revealed through National Assembly audit materials that global CPs have more favorable contract terms than domestic CPs. According to data received by Democratic Party lawmaker Kim Seong-su from telecom companies in 2019, the network usage unit price for six domestic CPs, including Naver, was about 40% higher on average than that for six global CPs such as Meta and Apple. This means that domestic businesses pay more even when using the same amount of data.
According to data from the statistics site 'TwitchTracker,' as of the 7th, among the average weekly viewers of 2,516,630 over the past week, Korean-speaking viewers numbered 143,427 (5.7%), ranking sixth. This is after English (1,064,802), Spanish (270,300), Russian (184,487), Portuguese (179,097), and German (153,500). It is even more than Japanese viewers (131,921). This reflects how developed the culture of watching 'inbang' (internet broadcasts) is in Korea. The telecom industry explains that it is natural to pay more because a lot of traffic is generated in Korea, not because of unit price issues.
About a year ago, when Twitch abolished the VOD (video on demand) feature, it drew a line by saying "it is unrelated to network cost increases," but now it has reversed its stance and cited network usage fees as the reason for withdrawal. This has led to criticism that it is merely an excuse for business failure. There is also a comparison with AfreecaTV, which continues to post strong results, recording its highest-ever quarterly revenue (87.9 billion KRW, operating profit of 21.9 billion KRW) in Q3. AfreecaTV is known to pay over 10 billion KRW annually in network usage fees, yet it maintains an operating profit margin of 24.9%.
‘Naver’ transfer frenzy predicted as ‘biggest beneficiary’
Since starting its Korean service in 2017, Twitch has been the lifeline of the domestic 'game inbang' scene for six years. There are over 2,000 streamers alone. Looking globally, according to a report by streaming data analysis firm Hatchet, the number of game streaming viewers in Q3 was 7.6 billion, with Twitch accounting for 53% and YouTube following with 40%. As the end of Twitch Korea’s service approaches in about two months, streamers are considering alternative platforms. The 'trend' is the upcoming Naver streaming service. The 'Yangdding Crew' (Yangdding, Daju, Samsik, etc.), who mainly broadcast the game 'Minecraft,' confirmed through their own meetings that they will move to Naver. Most other Twitch veterans also mentioned Naver. Some channels have been meeting with Naver for six months. The three top Twitch streamers with average concurrent viewers exceeding 10,000?‘Han Dongsuk,’ ‘Uwakkud,’ and ‘Pungwollyang’?also show a favorable response toward Naver.
Naver plans to launch a new game streaming service called Chijijik (CHZZK, tentative name) next year. It recently 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 they plan to offer features such as full HD 1080P quality options and a replay function in the future. Kim Hajung, a researcher at Daol Investment & Securities, said, "If they successfully recruit domestic Twitch streamers and secure user traffic, the business value of Chijijik will exceed 1 trillion KRW," adding, "Twitch’s 2022 revenue is estimated at 204.6 billion KRW."
AfreecaTV is also considered a platform that will benefit from Twitch’s withdrawal. Thanks to this expectation, it hit the daily upper limit on the 6th. In fact, many streamers moved to AfreecaTV after Twitch imposed quality restrictions. Earlier this year, AfreecaTV CEO Jung Chanyong said, "The number of people who moved from Twitch is not in the tens but in the hundreds." American platforms that support live broadcasting, such as YouTube and Kick, are also emerging as alternatives. Streamers like 'Chimchakman' and 'Shuka World' are already simulcasting live broadcasts on both Twitch and YouTube.
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