Twitch to exit Korea, blaming 'prohibitively high' bandwidth fees

South Korea's bandwidth pricing is once again making headlines, with streaming firm Twitch blaming high network costs on its exit from one of the world's biggest esports markets.

Announcing Twitch's departure Tuesday, CEO Dan Clancy said network fees in Korea were ten times higher than most other countries.

"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," he wrote on the company blog.

"Ultimately, the cost to operate Twitch in Korea is prohibitively expensive and we have spent significant effort working to reduce these costs so that we could find a way for the Twitch business to remain in Korea," he wrote.

The company tried to cut network costs by experimenting with a peer-to-peer model and then, controversially, last year downgraded video resolution from 1080p to 720p. A year ago it also terminated its video on demand (VOD) service, widely seen as a protest against bandwidth fees.

"While we have lowered costs from these efforts, our network fees in Korea are still ten times more expensive than in most other countries," Clancy wrote.

Users blamed telcos

Twitch's battle over network charges is the latest clash between Korean bandwidth providers and foreign content providers. The telcos say that under the Telecommunications Business Act, OTT firms are obliged to pay for the cost of delivering their content.

So far they have been backed by the courts. SK Broadband, one of the big two local ISPs, has just concluded a bruising two-year battle with Netflix, reportedly winning a $30 million payment as part of its settlement with the US firm.

Just exactly how much Twitch has been paying for bandwidth isn't disclosed because it is subject to an NDA.

An official from the Korea Telecommunications Operators Association (KTOA) - a Twitch critic – was quick to point out that local web giant Naver and streamer AfreecaTV were operating profitably despite footing the same network costs.

The KTOA last year condemned Twitch's decision to lower its video resolution, complaining users had blamed it on service providers. In fact, the reduced resolution drew an angry response from users and almost certainly hastened Twitch's departure.

Ha Jae-pil, a professor of e-sports at Kookje University, says the change had made text less legible and caused users to shift to YouTube. "Twitch's influence has been weakened since," he told the New York Times (paywall applies).

Twitch's exit from Korea, the birthplace of e-sports, comes just as Naver is prepping its own live streaming service. It will launch a public beta of its live game-streaming platform, tentatively named Chzzk, on December 19, with commercial release next year, Yonhap news service reported.

Twitch officially ends its service on February 27, after which streamers won't be able to monetize their video and users won't be able to make purchases. The company, which is a unit of Amazon, has around 7 million streamers and 140 million active users worldwide.

A spokesperson for Korea's Ministry for Science and ICT declined to comment.