Today is a dark day for Korean gamers. Twitch, the popular streaming platform, has announced the closure of its service in South Korea on February 27th, citing that operating in one of the world’s largest esports markets is “prohibitively expensive.”
Dan Clancy, Twitch’s CEO, stated that the company had made a “significant effort” to reduce network costs to operate in Korea. However, they found that operating fees in the Asian country were still 10 times more expensive than in most other countries. Twitch described the cessation of operations in Korea as a “unique situation” in a blog post.
Netflix itself unsuccessfully sued a local broadband provider last year to avoid paying usage fees. However, the Seoul court ruled that the company must contribute to the network costs enabling its $500 million business in Korea.
Twitch attempted to decrease its network costs by experimenting with a P2P model and reducing streaming quality to a 720p video resolution, according to Clancy. Despite these efforts helping the company reduce network costs, they weren’t sufficient. The streaming service, owned by Amazon, stated that it had been operating in Korea with “significant losses” and that there was “no way forward” to manage the business sustainably in the country.
“I want to reiterate that this has been a very difficult decision, and we are deeply disappointed to have to make it. Korea has always played and will continue to play a special role in the international esports community, and we are incredibly grateful for the communities they have built on Twitch,” wrote Clancy.
Esports are a cultural phenomenon in South Korea, where professional gamers are essentially celebrities, and over half of the country’s 50 million inhabitants are fans of these competitions. South Korea dominates competitive gaming worldwide, especially in titles like Starcraft and League of Legends, and also hosts several of the world’s most important esports tournaments each year.
Until now, Twitch has amassed millions of users in South Korea, making it one of the most popular markets for the streaming service.