>Entertainment and the infrastructure that delivers it is an important pillar of soft power.

Might be a miscalculation if the goal is soft power as in cultural export (the so called Korean Wave). At least in the gaming/streaming space where Korea has been punching above it's weight in cultural impact since the StarCraft 2 days.

My guess is this policy results in Korean streamers on Korean sites streaming to Korean-only audiences. Reduces the worldwide crossover reach of Korean cultural export at least near and medium term.

Though YouTube is probably adequate for this if it can stick around...