The popular Amazon-owned streaming site Twitch has announced that it will be closing its services in South Korea on February 27, 2024. According to the company, its decision to close its doors South Korea was due to the high network fees and operating expenses unique to the country.

Twitch was operating at a loss

Twitch CEO Dan Clancy admitted the platform suffered large financial losses in the country. Despite the company’s attempts to lower the costs of running their service, the network fees in Korea are still a lot higher than in other countries they’re operating in. Clancy acknowledged the difficulty of this decision in a blog post on December 5.

“I want to reiterate that this was a very difficult decision and one we are very disappointed we had to make,” Clancy wrote in his blog on the subject. “Korea has always and will continue to play a special role in the international esports community and we are incredibly grateful for the communities they built on Twitch,” he added.

How does this decision affect streamers in South Korea?

The market was immediately affected after the announcement of Twitch, with shares of the South Korean streaming competitor, Afreeca TV, surging nearly 30%.

Measures were taken by Twitch in 2022 in an attempt to lower costs, including limiting video resolution to 720p. Still, those measures were not enough, and they even affected the company’s position in the South Korean streaming industry.

Aside from YouTube, Twitch has been the most used streaming platform among South Korean gamers, with reports saying that the platform attracts more than 300,000 viewers every day

Other platforms also take issue with the fees

It’s not just Twitch that finds it difficult to comply with the strict rules enforced by South Korea. Netflix and other multinational IT corporations have been involved in several legal battles over the costs of network usage with local internet providers. These difficulties draw attention to how difficult it is to bridge the divide between global platforms and South Korea’s particular regulatory framework.