Twitch to shut down in South Korea due to high costs

FILE PHOTO: Children playground miniatures are seen in front of displayed Twitch logo in this illustration taken April 4, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) - Amazon's 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, 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)

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