On the 5th of December last year, Twitch made the staggering decision of shutting down their business in South Korea. Why did this happen and what will be the future of the South Korean streaming industry?

It all started on the November of 2022, when Twitch decided to terminate its VOD and clip features from their Korean server. The quality of Korean streams also fell sharply from 1080p to 720p, which was quite a conspicuous difference. Viewers were frustrated that the main features unique to Twitch were taken away; viewing on the platform became an inconvenient experience. Twitch claimed they were forced to make the decision because the server maintenance fees were too costly, and a large number of people began to predict the shutdown of Twitch Korea. 

Everyone knew it was coming, but no one knew it would happen so soon and so suddenly. On the 5th of December 2023, Twitch made the abrupt announcement that they would permanently shut down their services in Korea and withdraw the business from the country from 27 February 2024.  

MensaLoL, a Korean League of Legends Twitch streamer and Youtuber, says, “I knew Twitch’s decision was inevitable, ever since they stopped providing VOD and clip services and restricted stream qualities. But I didn’t expect them to shut down so quickly. I can only imagine what kind of difficulties led to their decision.” 

On the next day of the announcement, the CEO of Twitch, Dan Clancy, turned on his Twitch stream on the Korean server to shed light on the details and answer questions. He said: “We’ve been losing a fair amount of money from Korea. Network usage fees are over 10 times more expensive to operate in Korea in terms of those in other countries. 

“Another fundamental problem in Korea is the cost of delivering data. As Twitch grows, we actually lose more money in Korea. We have been operating this way for the past three years.” In other words, Twitch has been going through the irony of increased users leading to losing more money, because more people watching means more data transmission, which is ultimately more bills in Twitch’s mailbox. 

Streamers and viewers were shocked. Hyunsoo Song, an ex-moderator for streamer ‘Dongsukhan’ and active Twitch viewer, said: “I’m guessing we all knew it, but I didn’t know the situation was this bad. I hope (Korean) Twitch streamers find a way out of this mess. I’m also worried that South Korea will lose a lot of competitiveness in the global streaming market, because a majority of the foreign viewers that watch Korean streams are Twitch users.” 

Inven, Korea’s largest gaming community, journalist Doohyun Lee points out the oligopoly of South Korea’s Internet Service Providers (ISP), namely KT, SKT, and LG, as the main reason behind the high expenses in network usage. He says: “without competition these companies have zero reason to lower their prices and so they will always stay above those of foreign ISPs.” Statistics show that Twitch have annually been paying an average of $40 million to Korean ISPs for network usage, which is a figure that no other country depicts. 

Quite evidently, the ISPs are refuting this view by criticising Twitch itself in that their business managements were deteriorating, and sales were decreasing anyways, so the blame should in fact be on them and not network fees. Even so, the current dominating view is that the expensive network fees hold significant responsibility, and many viewers have even made petitions to regulate these companies. 

So was this the end for streamers in Korea? Fortunately, there were several options that streamers could choose from to move their channel and communities to. The main platforms that substituted Twitch are AfreecaTV, CHZZK and Youtube. 

Among them, AfreecaTV is considered the main competitor of Twitch. AfreecaTV is a domestic company that dominated the streaming industry until Twitch was introduced in Korea in 2011. In November 2023, 52% of the total streaming viewers on mobile devices watched Twitch while 45% watched AfreecaTV in Korea.  

MensaLoL is one of the streamers that were forced to leave Twitch. He says: “I loved Twitch because of its unique and active atmosphere. AfreecaTV has a rather spicy environment, and live streams on Youtube didn’t seem too active. On the other hand, I can’t quite see any flaws in Twitch. It’s such a shame we had to leave.” 

MensaLoL has currently moved his channel to CHZZK, which is a brand-new streaming platform made by Naver, Korea’s largest web portal. He explained the reason as being CHZZK trying to make their interfaces and UI as similar as Twitch, which is presumably in order to attract Twitch streamers to their platform by making the environment as Twitch-friendly as possible.

When asked about how streamers had coped with the situation at the time, he says, “I don’t think a lot of other streamers panicked too much. 99% of them were simply in the state of finding ways to move on, especially in terms of choosing which platform to move to.” 

Now, a question that might be asked is why Twitch was the only victim of network usage fees. If they were so expensive, why haven’t the other platforms shut down as well? 

According to Korean newspaper Business Post, the main reason for this lies under the grid computing system that AfreecaTV has been implementing in their servers. Originally, streaming platforms transmitted data directly from their central server, but the grid computing makes users send the data between themselves. This reduces the amount of traffic, which means the costs needed to transmit the data can be saved as well. 

In a National Assembly hearing against the ‘Science, ICT, Broadcasting and Communications Committee’, Eunha Huh, a member of the National Assembly, revealed data showing that the number of AfreecaTV users was more than a double of Twitch users, but the data traffic was less than an eighth of Twitch’s. This indicates how effective grid computing is in terms of reducing traffic and ultimately reducing costs. As such, AfreecaTV managed to reduce their annual network fees from their peak of $70 million to a surprising average of $11.5 million, while for Twitch, the figures had still stayed at around $50 million.

So why did Twitch not use grid computing? The thing is, Twitch tried it in July 2022 but decided to abandon it after a few months. As a result of this abandonment, Korean stream resolutions had to be decreased from 1080p to 720p. As Mr. Clancy explained, “we did make improvements with peer-to-peer grid computing, but they were not enough to reach the break-even point.” Moreover, Twitch was not fond of a system that makes its users take on the burden of transferring data.  

Mr. Lee thinks that CHZZK will benefit the most from this incident. He mentions the similar atmospheres and practical payment methods as the main reasons. CHZZK and Twitch have shown similar UI, as Naver and Twitch share a common business strategy to keep their streams focused specifically on gaming. 

On the other hand, some think AfreecaTV will become the prime platform for streaming in the near future. Mr. Song says: “CHZZK is yet in its early stages of development, and a lot of big streamers such as Woowakgood have already moved to AfreecaTV. Also, a large number of Korean Twitch streamers actually first started their streaming career on AfreecaTV, so it’s as if they’re just back home.” 

It has been almost three months since the shutdown of Twitch, and the great platform migration of streamers turned out to be about half and half, that is half to AfreecaTV and the other half to CHZZK. Although everyone must have settled down to their new platforms and environments by now, it still feels quite bitter that we won’t be able to see them streaming on Twitch ever again.