Twitch exits Korea, leaving opening for Naver

Industry

Published: 06 Dec. 2023, 18:25 Updated: 08 Dec. 2023, 14:28

Twitch exits Korea, leaving opening for Naver

Twitch CEO Dan Clancy discussed the platform's departure from Korea in a livestream on Wednesday. [TWITCH CAPTURE]

Twitch, a San Francisco-based streaming service owned by Amazon, is pulling out of Korea due to expensive networking fees. While local users and streamers mourn the platform's loss, local competitors are leaping forward to fill the space.

The platform will cease operations in Korea on Feb. 27 of next year, Twitch CEO Dan Clancy announced in a blog post Tuesday.

Clancy said operation costs in Korea are “prohibitively expensive.” Multiple attempts to cut expenses, including experimenting with a peer-to-peer model for source quality streams and capping resolution at 720p, have fallen short.

“While we have lowered costs from these efforts, our network fees in Korea are still 10 times more expensive than in most other countries,” he said. “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.”

Twitch’s departure is the latest development in the usage fee battle that local internet providers and foreign streaming services, such as Netflix, are currently waging in Korea.

Network providers have been demanding that global platforms to pay more for the high data traffic they incur.

With Twitch out of the picture, local streamers have two other dominant platforms left to operate: AfreecaTV and Naver.

Shares of AfreecaTV, a local streaming provider, skyrocketed 29.91 percent to close at 83,400 won ($ 63.41) on Tuesday. Naver’s shares inched up 0.23 percent to 213,500 won.

Naver is scheduled to open a beta version of its proprietary livestreaming platform, dubbed “Chzzk,” on Dec. 19, with a public launch to follow next year.

The platform is expected to be tailored to the live broadcasting of games, equipped with a user-friendly interface and donation services.

Livestreaming will be capped at FHD resolution, and video-on-demand will be available.

Experts paint a rosy outlook for the Naver’s upcoming service.

“If Naver can attract local Twitch streamers and attain user traffic, Chzzk’s market value is expected to go over 1 trillion won,” said analyst Kim Ha-jeong of Daol Investment & Securities. “The new platform is also expected to spill over to Naver’s earnings as the service expands by integrating Naver’s other businesses in advertising and commerce, as well as its online communities.”

Kim added that popular Twitch streamers are already actively utilizing Naver’s online communities to communicate with their user bases and projected a high possibility that Naver's platform will successfully attract traffic.

Clancy also announced that Twitch plans to operate in collaboration with alternative local services, including Naver, in a live broadcast held on Wednesday.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]