Popular video service Twitch has announced its decision to shut down its struggling business in South Korea. The company's chief executive, Dan Clancy, blamed the closure on the "prohibitively expensive" costs of operating in the country. In a blog post, Clancy revealed that the network fees Twitch has been paying to South Korean internet operators were 10 times higher than in most other markets. While specific numbers were not provided to support these claims, Clancy stated, "We've made the difficult decision to shut down the Twitch business in Korea on Feb. 27, 2024."

Twitch had already taken measures to reduce costs by limiting video quality, downgrading its resolution from 1080p to 720p in September 2022. Additionally, the platform blocked South Korean streamers from uploading video-on-demand content later that year. These moves were met with strong opposition from South Korean users, many of whom switched to alternative platforms such as YouTube or popular local streaming site Afreeca TV.

Twitch's decision to exit the South Korean market comes amidst the anticipated launch of live streaming services for online video game leagues by Naver, the country's largest domestic internet company. With mounting competition on the horizon, Twitch's struggles are not limited to South Korea. The company announced layoffs of 400 employees in March, citing a failure to meet user and revenue growth expectations.

Clancy admitted that Twitch has been operating in South Korea at a significant loss and stated that there was no viable way for the business to operate more sustainably in the country. However, South Korean telecommunications companies have expressed doubt about Clancy's claims regarding network fees, as these fees are negotiated individually and often protected by non-disclosure agreements. Jung Sang-wook, an official from the Korea Telecommunications Operators Association, suggested that Twitch's decision may be influenced by wider management issues rather than solely financial constraints. The association had previously criticized Twitch's decision to downgrade video resolution, claiming that it caused user complaints to telecoms providers that were providing smooth services.

This move by Twitch reflects the ongoing conflicts between global content providers and South Korean internet operators over high charges. Similar disputes have arisen in Europe as well. In September, Netflix and SK Broadband, a South Korean internet provider, reached an agreement to settle a legal dispute over network fees, although the terms were not disclosed.

Twitch's withdrawal from South Korea marks a significant setback for the platform but also highlights the challenges faced by international companies operating in the country's competitive market.