{"id":2203024,"date":"2023-12-06T18:42:52","date_gmt":"2023-12-06T09:42:52","guid":{"rendered":"https:\/\/koreapro.org\/?p=2203024"},"modified":"2023-12-07T16:19:41","modified_gmt":"2023-12-07T07:19:41","slug":"twitchs-exit-highlights-costs-of-south-koreas-insular-digital-strategy","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/12\/twitchs-exit-highlights-costs-of-south-koreas-insular-digital-strategy\/","title":{"rendered":"Twitch\u2019s exit highlights costs of South Korea\u2019s insular digital strategy"},"content":{"rendered":"

Amazon\u2019s livestream service Twitch <\/span>announced<\/span><\/a> its intention on Tuesday to halt all operations in South Korea by the end of February, attributing the decision to financial challenges imposed by the <\/span>Network Usage Fee Act<\/span><\/a>.<\/span><\/p>\n

The move is a telling example of the tangible effects of regulatory policies on the digital economy, with the withdrawal of Twitch from South Korea poised to impact stakeholders ranging from content creators and viewers to the broader streaming and <\/span>esports sectors<\/span><\/a>.<\/span><\/p>\n

This raises critical questions about the economic implications of South Korea\u2019s digital strategy, which risks driving away international players and compromising the country\u2019s ambitions to be a global leader in digital media.<\/span><\/p>\n

STREAMERS IN LIMBO<\/b><\/p>\n

Twitch\u2019s withdrawal from South Korea is a disruptive shift for its community of streamers and viewers, who numbered approximately <\/span>8 million<\/span><\/a> in 2021. The platform has been more than just a broadcast medium for many South Korean content creators; it has been a <\/span>substantial source of revenue<\/span><\/a> and a hub for community engagement.<\/span><\/p>\n

The company\u2019s abrupt exit leaves its content creators facing an uncertain future as they must decide how and if to migrate to other platforms like YouTube or AfreecaTV.<\/span><\/p>\n

Twitch said in its announcement that it would help its South Korean users with this transition, but it is fraught with challenges. Each platform has different operational dynamics, audience bases, content algorithms and <\/span>monetization structures<\/span><\/a>.<\/span><\/p>\n

Twitch streamers may need to make significant adjustments in their content strategy and community-building efforts on the new platforms. Moreover, such moves risk fragmenting established viewer communities, potentially leading to diminished audience reach and reduced earnings.<\/span><\/p>\n

This predicament exposes a crucial aspect of the digital content landscape in South Korea: the susceptibility of content creators to fluctuations in the platform-dependent economy, exacerbated by regulatory measures such as the Network Usage Fee Act.\u00a0<\/span><\/p>\n

This act, while aimed at <\/span>managing network traffic and costs<\/span><\/a>, inadvertently places a burden on platforms and, by extension, the content creators who rely on them.<\/span><\/p>\n

SHIFTING DIGITAL HORIZONS<\/b><\/p>\n

Twitch\u2019s exit from the South Korean market will create a significant gap in not only streaming but also esports, a domain where Twitch has been a major player in South Korean and international markets.<\/span><\/p>\n

Existing platforms like YouTube, AfreecaTV and Naver will likely absorb a significant portion of Twitch\u2019s user base. However, it is unclear if these platforms will adjust their features and policies to cater to the influx of new users and content creators.<\/span><\/p>\n

Among the two platforms, Twitch streamers will likely find it easier to transition to AfreecaTV and <\/span>Naver<\/span><\/a> as both companies cater to <\/span>similar markets and demographics<\/span><\/a>. This shift could encourage AfreecaTV and other local streaming platforms to further innovate.\u00a0<\/span><\/p>\n

However, AfreecaTV\u2019s lack of international presence compared to Twitch will likely impact South Korean streamers\u2019 revenues.<\/span><\/p>\n

While YouTube has far <\/span>greater international reach and appeal<\/span><\/a> than most other video streaming platforms, it does not serve the same niche market that Twitch serves. As a result, esports organizations will likely struggle to attain the same level of visibility and engagement that Twitch provided, potentially impacting sponsorship and the overall growth of the sector.<\/span><\/p>\n

While <\/span>new players<\/span><\/a> could emerge in the streaming market, the transition period could see reduced activity and engagement in the esports scene, reflecting the challenges of adapting to new broadcasting channels and building up viewer bases.<\/span><\/p>\n

\"\"

An illustration of a video game streamer | Image: Korea Pro<\/em><\/p><\/div>\n

ECONOMIC RIPPLES<\/b><\/p>\n

Twitch’s departure from South Korea will have a direct impact it will have on the platform\u2019s <\/span>more than 400 employees<\/span><\/a> and content creators, but the after effects are also likely to reverberate through the wider digital content economy and related industries.<\/span><\/p>\n

Businesses<\/span><\/a> that offer partnerships, advertising and sponsorships to Twitch will have to navigate a landscape without one of its key players in the South Korean market. This could lead to reduced marketing opportunities and financial setbacks, particularly for <\/span>small businesses<\/span><\/a> that tailored their services around the Twitch ecosystem.<\/span><\/p>\n

The broader implications for these businesses are substantial, potentially leading to financial setbacks, scaling down operations, or even closure, thereby affecting the livelihoods of those employed in these sectors.<\/span><\/p>\n

On a broader scale, the withdrawal could signal to other foreign investors and digital companies the challenges of operating in the South Korean market under the current regulatory framework. This perception might deter future investments, potentially stalling the growth of the country\u2019s digital economy.<\/span><\/p>\n

Twitch\u2019s exit thus risks eroding the stability and attractiveness of South Korea\u2019s digital market.<\/span><\/p>\n

DIGITAL STRATEGY UNDER SCRUTINY<\/b><\/p>\n

The streaming platform\u2019s withdrawal also raises critical questions about South Korea\u2019s long-term digital strategy, spotlighting the need to reevaluate its approach to digital content regulation. Twitch\u2019s imminent departure is the most tangible sign yet that South Korea\u2019s regulations are stifling its digital sector and deterring international companies from operating in the country.<\/span><\/p>\n

However, it is unlikely that the ROK will reconsider the Network Usage Fee Act anytime in the near future. Supported largely by the main opposition <\/span>Democratic Party<\/span><\/a> (DP), which holds a majority in the National Assembly, the law primarily targets international companies that are <\/span>perceived to benefit unfairly<\/span><\/a> from the existing digital infrastructure without contributing adequately to its costs.<\/span><\/p>\n

With parliamentary elections approaching in April, there is little indication that the DP will shift its stance.<\/span><\/p>\n

For the foreseeable future, South Korean lawmakers\u2019 unwillingness to reconsider the Network Usage Fee Act could further influence how other international companies perceive and engage with the market, potentially leading to a more insular digital environment. The situation highlights a critical juncture in the ROK\u2019s digital strategy, where regulatory priorities and the realities of the global digital economy are in contention.<\/span><\/p>\n

Further, Twitch\u2019s departure underscores the implications of the law for international trade.<\/span><\/p>\n

As the Network Usage Fee Act affects U.S. companies significantly, it raises concerns about its alignment with South Korea\u2019s obligations to the World Trade Organization and the Korea-United States Free Trade Agreement. This situation could lead to heightened trade tensions between Seoul and Washington, particularly as presidential elections draw closer in the U.S.<\/span><\/p>\n

Twitch\u2019s exit from South Korea highlights the consequences of regulatory decisions on the digital content ecosystem, affecting local and international stakeholders alike. As the ROK continues to navigate its digital future, this situation serves as a reminder of the need for policies that consider the broader implications for a diverse range of participants in the digital landscape.<\/span><\/p>\n

Edited by Alannah Hill<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Domestic Politics<\/span><\/a>Technology & Cyber<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

Amazon\u2019s livestream service Twitch announced its intention on Tuesday to halt all operations in South Korea by the end of February, attributing the decision to financial challenges imposed by the Network Usage Fee Act. 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