[Into the Stocks] AfreecaTV Benefits from Twitch Quality Adjustment... Influx of BJs

[Asia Economy Reporter Lee Jung-yoon] Competing internet broadcasting platform Twitch has lowered its video quality, allowing AfreecaTV to reap the benefits. It is explained that AfreecaTV is benefiting not only from a rise in stock price but also from the expected influx of users and BJs (one-person media hosts) from Twitch.

According to the Korea Exchange on the 31st, AfreecaTV closed at 81,400 KRW, up 3.17% from the previous trading day on the 28th. Since Twitch announced its video quality restriction policy on the 29th of last month, the stock price has surged 28.19%.

AfreecaTV is seeing an influx of users as Twitch, a global content provider (CP), lowered its highest domestic video quality from 1080p to 720p. The video quality restriction is interpreted as being due to recent disputes over network usage fees. Previously, the National Assembly pushed legislation to mandate payment of network usage fees, citing traffic generation by overseas CPs as the reason.

The migration of BJs to other platforms due to Twitch’s video quality restrictions is also a positive factor. In particular, the movement of BJs known as VTubers is highly anticipated. VTuber is a portmanteau of "virtual" and "YouTube," referring to internet broadcasters who operate channels using virtual characters. Riding the wave of the 'secondary character' (bukae) trend, even existing celebrities and BJs have engaged in VTuber activities. Bloomberg reported that the VTuber market is expected to continue growing, estimating it was worth 3.6 trillion KRW last year and will expand to 14 trillion KRW by 2025.

AfreecaTV’s revenue in the third quarter of this year was 81.8 billion KRW, a 15.2% increase compared to the same period last year. Operating profit decreased by 10.6% to 20.7 billion KRW, and net profit fell 13.6% to 17.1 billion KRW. With the expansion of new advertisers, platform advertising and content-type advertising grew, resulting in a 60% increase in total advertising revenue compared to the previous year. Operating expenses increased by 28.3% year-on-year due to higher commission payments and content production costs. The effect of Twitch migration is expected to become visible from the fourth quarter of this year. Additionally, the overlapping schedules of the League of Legends World Championship (Worlds) held this month and the Qatar World Cup scheduled for next month are expected to bring in additional users.

However, the removal of Google Play’s in-app payment function remains an issue to be resolved. In June, Google mandated in-app payment policies, charging up to 30% commission on user payments. In response, AfreecaTV is seeking ways to alleviate inconvenience by raising fees while encouraging payment methods via PC and enabling automatic recharge of the paid support item, Star Balloons.

Hyunji Lee, a researcher at Eugene Investment & Securities, explained, "AfreecaTV is experiencing a reflective benefit due to Twitch’s video quality adjustment," adding, "If the influx effect from Twitch is proven by numbers, it appears to be a phase where the stock price can rise."

This content was produced with the assistance of AI translation services.