With esports booming across Asia, South Korea has emerged as a breeding ground for platforms like Twitch. However, the streaming giant is facing an unexpected challenge: rising operating costs that have forced it to make the difficult decision to pull out of the country.
In a December 2023 blog post, Twitch CEO Dan Clancy announced the company's plans to close its operations in South Korea by February 2024. He cited unsustainable operating costs as a primary factor, stating that "the cost of doing business for Twitch in Korea is too high."
Network fees 10 times higher than in other countries
Despite significant efforts to reduce costs, including experimenting with peer-to-peer models and limiting stream quality to 720p, Twitch found itself saddled with network fees that were 10 times higher than in other countries.
This resulted in a "significant loss" for the company, making continued operations in the region unviable. While the news is a blow to the South Korean streaming community, Twitch has pledged to "help these communities find new homes." This likely includes encouraging streamers to move to other platforms.
However, the success of such transitions is uncertain, as evidenced by the struggles faced by streamers who have moved to the now-defunct Mixer platform.
Regardless of the popularity of Esports, Twitch decided to leave
The future of Twitch in South Korea remains unclear.
Whether the company will ever return to the region depends on finding a solution to the high operating costs. For now, the focus is on shutting down services and helping the South Korean community find alternative homes for their content.
The move underscores the challenges even the biggest tech companies face when operating in diverse markets. While South Korea's esports market is undoubtedly lucrative, the unique economic landscape has proven too difficult for Twitch to navigate. The company's exit serves as a warning to other global players looking to capitalize on the Asian esports boom.