Twitch is leaving South Korea, with plans to cease all operations on February 27. This is due to ‘prohibitively expensive’ networking fees, according to CEO Dan Clancy. The news is a major bummer, as the country is one of the largest esports markets in the world, with some of the most competitive League of Legends and Starcraft players around.
Clancy calls this a “unique situation," noting that operating in South Korea ends up being ten times more expensive than other countries. He went on to write that Twitch undertook a “significant effort” to continue operations, but the Amazon-owned company simply couldn’t afford it.
Some of these efforts included incorporating a lower-cost peer-to-peer model and downgrading the resolution of streams to 720p, according to TechCrunch. The company had been running at a significant loss and it decided to, well, stop doing that.
“I want to reiterate that this was a very difficult decision and one we are very disappointed we had to make. Korea has always and will continue to play a special role in the international esports community and we are incredibly grateful for the communities they built on Twitch,” wrote Clancy.
Netflix has also been open about its struggles to continue operations in South Korea. The streaming giant and local internet service provider SK Broadband had been tossing lawsuits back and forth regarding networking fees before settling back in September. As usual, consumers got the shaft on this one, as Netflix ended up raising prices by around 13 percent.
So what’s the issue exactly? It all boils down to a particular type of internet traffic tax employed in South Korea called the “Sending Party Network Pays” (SPNP) model. This tax requires the tech company, Twitch in this case, to pay a fee to the ISP for traffic to be delivered to the end user. Foreign companies resisted these efforts for years but there have been recent crackdowns, and here we are.
South Korea is the first country to force the SPNP model, but other nations are looking to follow suit. India, for instance, has expressed interest in changing up its telecom rules in favor of ISPs and the EU has been debating the issue since March. As for Twitch, the company’s hosting a live stream today to address concerns from Korean users.