"Claim That Korea's Network Usage Fees Are 10 Times Higher Is Groundless"
Twitch Faces Streamer Decline and CEO Change... Suspected Management Difficulties
"An Opportunity to Protect Users and Resolve Domestic CP Discrimination"
The Korea Telecommunications Operators Association (KTOA) has strongly refuted Twitch's claim that it will terminate its domestic service due to high network usage fees in Korea. Questions have also been raised as to whether management failure, rather than network usage fees, is the fundamental cause.
On the 22nd, KTOA issued a statement regarding Twitch's 'termination of domestic service' and rebutted Twitch's claim that Korea's network usage fees are higher than those in other countries. In December last year, Twitch stated, "Korea's network usage fees are ten times higher than those in other countries, making it impossible to provide the service," and announced, "We will cease operations in Korea on February 27."
KTOA argued that Twitch's claim that domestic network usage fees are ten times higher than overseas is not true. According to KTOA, "Based on the unit prices by country from a CDN provider, the fees paid by content providers (CPs) are almost the same in most countries including Korea, Japan, Hong Kong, and Singapore, except for North America where the main servers are located." CDN providers mediate traffic between CPs and ISPs.
Furthermore, "Considering that Twitch reduced its fees by 24% during the process of differentiating subscription fees by country in 2021, the claim that it had difficulties providing services due to network usage fees is unconvincing," and added, "To claim a burden from network usage fees, it is essential to disclose domestic business revenue, operating profit (loss) levels, and the actual network usage fees paid, but the officially known domestic revenue was only 2.1 billion KRW as of 2022."
Meanwhile, KTOA analyzed that the fundamental cause of Twitch's domestic service termination lies in management failure. KTOA explained that the number of Twitch streamers overseas decreased by about 30%, from 9.9 million in 2021 to 7 million last year, due to streamers moving to competitors, and that the adjustment of streamer revenue share (from 70% to 50%) has led to a vicious cycle of declining users and revenue.
KTOA stated, "Domestically, policies that restricted video quality to a maximum of 720p, suspended replay services, relinquished Korean broadcast rights for League of Legends, and limited simultaneous video streaming with other platforms have caused dissatisfaction among users by restricting streamers' autonomy and viewing rights."
It added, "If domestic network usage fees were excessively burdensome, competitors would not be able to provide normal services or newly enter the streaming market." According to KTOA, the monthly active users (MAU) of Twitch and its competitor AfreecaTV are 2.32 million and 2.15 million respectively, and AfreecaTV has achieved an operating profit margin of over 25% through continuous revenue growth. Recently, Naver also launched the streaming platform 'Chijijik'.
KTOA emphasized that Twitch's service termination should be used as an opportunity to protect domestic users and the industry. Since streamers and resident companies operating on internet platforms rely on these platforms for their livelihoods, caution is necessary when terminating services. KTOA stated, "Twitch neglected user protection by unilaterally notifying the termination of domestic service, and has received recommendations for improvement and investigations from the Personal Information Protection Commission and the Korea Communications Commission due to forced quality restrictions and non-compliance with the domestic agent system."
It further stated, "Many global CPs have caused controversies over unfair treatment of domestic users by unilaterally changing service conditions and policies and suddenly raising fees," and added, "To prevent this, user protection system improvements should precede, such as obligating global CPs to provide users with sufficient notice periods before changing policies."
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