"One of the reasons for the pullout is a slump in the video and DVD market, resulting from online piracy and illegal downloading," an official at Warner Brothers Home Video Korea told Yonhap news agency.
The US producer of film and television entertainment will instead focus on its digital distribution 'pre-DVD' business, the official said.
It is the last remaining Hollywood company to withdraw its home entertainment business from South Korea.
In October the studio announced plans to become the first in Hollywood to make movies available through video-on-demand in South Korea, two weeks before DVD releases.
South Korea is one of the world's most wired societies, with nearly all households connected to the Internet.
A survey by the Korean Film Council found that more than 47 percent of respondents had downloaded at least one film from the Internet per year, Yonhap said.

Copyright AFP (Agence France-Presse), 2008