Amazon's game-streamer Twitch to quit South Korea, citing savage network costs

The idea that Big Content should pay network operators is in trouble

Amazon’s game-streaming business Twitch has announced it will quit South Korea, citing network access costs ten times higher than those it pays in any other nation.

Twitch lets gamers stream their play in real time, with some streamers winning audiences in the millions and monetizing their channels. eSports teams and players dare not ignore the platform.

"The cost to operate Twitch in Korea is prohibitively expensive," CEO Dan Clancy wrote earlier this week, adding that the biz experimented with a peer-to-peer model and limited streams to 720p.

"While we have lowered costs from these efforts, our network fees in Korea are still ten times more expensive than in most other countries," he added, noting that those costs have seen Twitch operate "at a significant loss" in South Korea.

"Unfortunately there is no pathway forward for our business to run more sustainably in that country," he conceded.

Clancy's post describes the situation in South Korea as "unique" – likely a reference to the fact that the nation's carriers charge big producers of traffic for access to their networks.

Supporters of such fees point to the fact that carriers have huge capital expenditure requirements, but operate at low margins. By way of contrast, the likes of Netflix, Twitch, Amazon, Google, Apple, and Facebook that have fat margins they can’t earn without carriers bringing their products to users' eyeballs. Network fees, it's argued, are a fair way to spread the cost of building networks.

In 2021 local telco SK Broadband sued Netflix over network access fees.

But the idea doesn't have a lot of support outside South Korea. The European Union, for example, recently conducted a consultation process that found investment in talent and shared infrastructure – some of it publicly funded – might be a better approach.

Even in South Korea, the heat has gone out of the fight: Netflix and SK Broadband called a truce in September 2023.

Twitch leaving the country will likely spark further debate about the appropriateness of network access fees.

Twitch boss Clancy promised Korean streamers the biz will help them to move their communities "to alternative livestreaming services in Korea."

But Twitch itself will go dark on February 27, 2024

The end of local service will be felt beyond South Korea. Twitch has advised streamers elsewhere in the world they "may experience a change in revenue if they receive significant support from users in Korea." ®

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