Twitch to shut down in South Korea due to high costs (updated)

Soop

06/12/2023 08:42

(Adds comment from South Korea's science ministry in paragraphs
4-5, context)
    By Hyunsu Yim
       Dec 5 (Reuters) - Amazon's  AMZN.O  streaming unit
Twitch on Tuesday said it will shut down operations in South
Korea in February next year, due to high operating costs and
network fees.
    "Twitch has been operating in Korea at a significant loss,
and unfortunately there is no pathway forward for our business
to run more sustainably in that country," CEO Dan Clancy said in
a blog.
    Network fees in Korea are still 10 times more expensive than
in most other countries, he said, adding that the company spent
significant effort working to reduce operating costs to remain
in business.
    South Korea's Ministry of Science and ICT (Information and
Communication Technology) said in a statement that network usage
fees were being reviewed as "a comprehensive matter that
requires consideration of the sustainable development of the
internet network, the content industry and user convenience".
        The ministry did not comment directly on Twitch's
decision to end its operations.
  
        The debate over who should foot the bill for increased
traffic usage has seen global technology giants clash with local
internet providers in South Korea.
  
        Earlier this year, Netflix and South Korean internet
service provider SK Broadband 
    withdrew
     lawsuits against each other over network usage fees.
  
        In 2022, Twitch limited video resolution in South Korea,
a country with a booming esports scene and use of online
videogames, citing growing operating costs. 
  
        Shares of Afreeca TV  067160.KQ , a South Korean
streaming platform and competitor, closed up nearly 30 percent
on Wednesday following the announcement.
  
    Twitch had laid off more than 400 employees in March after
its user and revenue growth did not meet expectations.

 (Reporting by Hyunsu Yim in Seoul and Gnaneshwar Rajan in
Bengaluru; Editing by Varun H K, Ed Davies)
 ((Gnaneshwar.Rajan@thomsonreuters.com;))