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1Q_01 2Q_01 3Q_01 4Q_01 1Q_02 2Q_02 3Q_02 4Q_02 1Q_03
2,209 2,221 2,222 1,682 1,923 568 1,160 1,038 582
1,615 2,046 2,608 3,056 4,906 4,833 5,821 6,302 6,746
6,767 7,405 12,311 17,075 18,602 17,685 19,243 19,195 19,711
14,004 14,235 16,409 16,681 15,970 12,845 13,065 11,450 10,447
PC Caf©

Source: NCsoft (2003). (Unit: million Korean won)

royalty from foreign countries (especially from Taiwan) increased rapidly, amounting to
$U.S. 5.5 million in the first quarter of 2003 (NCsoft, 2003).

Cybercommunity: Social and Cultural Dimensions of the
Online Game

A Web-crazed country: Earlier this year, Internet gaming company NCsoft found
it had some unwelcome visitors. The Seoul company is the creator of Lineage,
an online fantasy game in which players do battle in a medieval cyberworld with
swords and shields and magical rings that change their identities. Players can
swap weapons or buy and sell them using the game™s cybermoney. So popular
is Lineage - and so competitive its fans - that players started buying and selling
weapons with real money instead of cyberbucks. (Rings were reportedly going
for as much as $300 each.) NCsoft didn™t like that practice, and barred two
offending players from the game. Soon after, the banned players barged into
NCsoft™s office and demanded to be allowed back online. The company had to

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Internet Economy of the Online Game Business in South Korea 301

call the police. That™s how it is today in South Korea”the Internet seems to have
made the whole nation a little crazy (Macintyre, 2001).

What was happening to these two players? What was their desire to purchase rings (or
the screen image of the rings composed of digital signals) in the cyberworld for real
money? Were game players so crazily intoxicated with the NCsoft™s online game that they
could not recognize their social positions in-between the cyberspace and the real world?
Or is this a coincidence happening in South Korea, where about one-third of the
country™s 48 million people are logging onto the Internet on a daily basis, one-third are
using wireless Internet service on the street, and more than one-half are at home using
the Internet through super-speed broadband connection?
In regard to cyberspace as a social space of the Internet, one of the contemporary
questions in social sciences has been, “How could the cyberspace of the Internet impact
individual users and overall society?” An interesting answer from Poster (1996, 206) is
that, “There can be only one answer and that is that it is the wrong question.” Human
beings are usually understood to manipulate the materials for ends that they impose upon
the technology from a “pre-constituted” position of subjectivity. But, Poster argues that
the problematic aspect of cyberspace would be meaningless without considering the
subjectivity of the Internet user, who produces and transforms cyberspace as much as
she or he is transformed by cyberspace.
The significance of Poster™s argument is strongly embedded in the massively multiplayer
online game (MMOG), in which a large number of game players get together, not only
because of the game plot™s own merit, but because of its external social effects on the
game users™ socializing with other people, belonging to the game community, and feeling
free from the complicated real world. In this vein, online game players are not necessarily
users, consumers, or customers. Rather, they are creative producers and consistent
maintainers of the contents of the online game. As discussed above, almost all of the
online game developers strongly believe that one of the most crucial axioms in the
successful online game business is that players come for the game and stay for the
“community.” The key element of the online game business is to construct “social
bonds” among game players in cyberspace.
NCsoft™s Lineage is noted for its exquisite image-processing graphic technology,
through which 3D graphics of animated game characters, land, buildings, and other
objects in the game are projected into the two-dimensional digital space on the computer
screen. In terms of game players, this spatial representational technology is highly
conducive to the production of a “third” spatiality in-between cyberspace and the real
world. Here the creation of spatial simulacra accompanies the simultaneous epistemo-
logical process of domestication and foreignization of social space. These image-
process skills are used for the procession of simulation, which Baudrillard (1983) defines
as the image having four successive phases: (1) it is the reflection of a basic reality; (2)
it masks and perverts a basic reality; (3) it masks the absence of a basic reality; and (4)
it bears no relation to any reality whatsoever, that is, it is its own pure simulacrum. First,
Lineage contains a variety of simulated images that reflect the basic geographies of
reality, including not only large-scaled entities such as mountains, lakes, islands and
buildings, but also small-scaled materials such as trees, humans, and even more specific

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302 Park

and smaller items. The game™s simulation is not based on its high fidelity to basic reality,
but rather it appropriates the representational freedom inherent in its digital represen-
tation for generating a fantasy and attractive cyber-spatiality in which a medieval knight,
monsters, pizza, and candy coexist in a cyberspace beyond the restriction of time and
space, or beyond the real and the imaginary. The simulation in Lineage both reflects and
perverts basic realities. It generates the simultaneity of the unsimultaneous in cyberspace.
Therefore, game users commonly share a sense of in-betweenness of the real and the
simulated through their audio-visual experience in cyberspace. In this sense, Baudrillard
(1988) notes how easily an experience of a series of simulated images can produce a sense
of an actual and real experience (see also Nunes, 1995). A Lineage player in the U.S.
describes her spatial in-betweenness (reality vs. freedom) as follows:

Recently, I have found something new to share my spare time with, but it wasn™t
just a “game.” It was more like living a “life” in a fantasy world. ¦ What makes
it special is the realism such as the reality of actually taking the ferry to the
mainland. After leveling up only by killing a lot of orcs and werewolves, I was
ready to leave the Talking Island. The first time I left, it gave me a sense of leaving
an island like Alcatraz and stepping into a land of freedom and mystique. The
land of freedom was a feeling of accomplishment and desire, just like the feeling
of the early immigrants to the United States¦Lineage is more than a game, most
importantly, it is the freedom that gives this game its specialty. ¦ It is a real
fantasy world and it is this that makes me keep on playing this game, and it is
all of us, that makes this unique world a reality in Lineage (Player stories from
the Lineage™s community site, n.d., emphasis added).

The structure of virtual time and space in Lineage plays the more significant role in
producing a certain sense of “real” community in cyberspace, considerably detached
from the real world. In Lineage, the actual length of a day is four hours: two hours are
daytime and the other two are night. Usually it takes over 22˜24 hours, equivalent to
almost six days in Lineage, for an animated character to walk from one end to the other
of each cyberworld in Lineage. Because Lineage contains 50 simulated cyberworlds, it
takes about 1,100˜1,200 real-time hours or about 48˜50 full real days, equivalent to
288˜300 virtual days in Lineage, just to travel around the total space in Lineage. Thus
the time-space compression in cyberspace provides a common spatial and temporal
experience among the game players. The cyberspace in Lineage is pure simulacrum with
its spatiality, for example, when a player states, “A life wouldn™t be real if nobody slept
or ate, and definitely I had limits on playing this ˜life™ just like everyone else. I would sleep
when the Lineage world was dark and would wake up when dawn arrives” (Player stories
from the Lineage™s community site, n.d.).
The simulation of the human body in Lineage is also important in evoking a sense of
community and generating desires for socialization in cyberspace. The game represents
not only specific physical characteristics of human body such as hair, muscle, and skin
color, but it also visualizes invisible human attributes such as physical ability, resistance
to dangers, items for the body, the experience and disposition of hunger, as all these are
translated into quantitative values. The physical features of the game character are

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Internet Economy of the Online Game Business in South Korea 303

divided and quantified into six categories that include strength, dexterity, intelligence,
wisdom, constitution and charisma. Also, the social disposition of game characters is
visually represented. The bodies of game characters are categorized into three colors,
each of which representing an ethical value as lawful, neutral or chaotic. These character
statistics have a great influence on the progression of the game because they are critical
values that define specialized classes (e.g., knight, wizard, prince/princess, and elf) who
have different abilities in the game plot. Each player must choose a specific class to
belong to and consequently socialize and cooperate with other class-based game
players. In other words, while the quantitative simulation of human body enables users
to differentiate themselves from other users in Lineage, they are structurally and
ultimately destined to work together to attain game goals, develop the ability of their
game character, and, most of all, to survive the social life in cyberspace. A game character
actually requires sleeping, eating and exercise in Lineage, just as he or she does in reality.
NCsoft™s Lineage has another distinctive structure in that game users must construct
their own community in order to accomplish specific goals. Figure 7 is a typical
screenshot of Lineage, in which each animated game character represents an individual
game user. The community in Lineage is called “bloodpledge” and is composed of about
5˜100 game users who can communicate in a private mode and cannot harm one another.
They must cooperate in order to defend themselves from other bloodpledges™ attacks and
to accomplish given goals. In South Korea, there were about 1.2 million cumulative
registered communities in mid-2003, of which about 10,000 active game communities have
their own homepages on the Web and meet regularly in PC-caf©s, pubs and restaurants
in the “real” world. Again, the conventional dualism of cyberspace and real world is

Figure 7. NCsoft™s Lineage: A leading massively multiplayer on-line role playing game

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permission of Idea Group Inc. is prohibited.
304 Park

practically blurred and associated. The following game player™s story describes Lineage™s
community-oriented third spatiality:

I joined a small pledge early on and enjoyed sharing my items with them; we
became a family. ¦ My pledge and I would go to the mainland cave, or Dragon
Valley, and “work” there. We got a room in the hotel when we were tired and
fearlessly went back out to work again. ¦ It was all about teamwork. ¦ Before
dusk, many of us would leave for town to enjoy some beers at the bar. However,
some of my fellow pledgemates would gamble money on slime races only to lose
it all. They would grieve to me how they lost their money, and I would grieve that
our king from Kent Castle raised the taxes again. It was a typical life, after gaining
some levels we would be back in town talking about our Lineage life, and most
importantly our real lives also. ¦ Meeting new people from all over the world
and gathering together to play this “life” is what makes Lineage so special
(Player stories from the Lineage™s community site, n.d., emphasis added).

As a part of its marketing strategy, NCsoft periodically holds game tournaments in South
Korea and Taiwan with a large amount of prize money for participants and winners. It also
sponsors game users™ group travel, festivals and other social events. Along with
NCsoft™s strategy to aggressively promote social bonds among game users, the company
also operates multiple servers and frequently updates the game™s episodes. In March
2003, NCsoft operated 41 servers in South Korea and 33 servers in Taiwan. And, since
Lineage™s launching in 1997, NCsoft have released 12 different game plots. Except for the
servers used for testing and program-downloading, most of the servers have different
episodes, spaces, events and communities so that the company could minimize game
users™ boredom and maximize their desire to socialize with new people in this “third”
However, Lineage is not necessarily NCsoft™s exclusive, finished and closed world that
is produced to exist in the cyberspace. For example, NCsoft invited more than 600 game
players and held several public conferences in major six metropolises of South Korea in
2003. Principal topics in the conferences included Lineage™s system problems (i.e.,
networking speed), modification of animated game characters, plotting of the follow-up
game episodes, development of Lineage™s cyber-communities, etc. Based on these
feedback discussions with its customers, Lineage is becoming a third socio-economic
space that constantly evolves in-between real world and imagined space, and also in-
between producer and customer.

Discussions of the Internet as a GPT and a conventional form of technological innovation
often conceptualize the new information age as a modified replication of the telegraph
era or the telephone age. For example, Button and Taylor (2001) argue that “the new

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permission of Idea Group Inc. is prohibited.
Internet Economy of the Online Game Business in South Korea 305

technology has features common to many other network activities, albeit with a few
idiosyncrasies of its own, and by and large its role in society can be explained in
traditional economic theories, or at least by rather minor variations to that theory.”
However, aside from the Internet™s substantial impacts on conventional transaction
costs, financial and labor markets, overall economic productivity and efficiency, etc., the
“discontinuous” significance of the digital economy such as the online game business
lies in: (1) its heavy dependence on the Internet users™ convenient and inexpensive
accessibility to the broadband Internet infrastructure, (2) its dispensability with the
conventional system of material production, storage and distribution systems, and (3)
its principal concern with the creation of social spaces in which game users can
comfortably enjoy not only the game itself but also their social association with one
another. In this sense, truly, the Internet is arguably “a newly developed space with the
power to give rise to novel forms of human social interaction in almost any area of human
endeavor, commercial or otherwise” (Kenney and Curry, 2001, emphasis added).
In this chapter, I found out that the rapid success and consistent growth of NCsoft™s
Lineage is indebted to two principal factors. The first is the South Korean national
innovation systems (NISs) in the Internet broadband infrastructure sector. Especially
since the 1997 financial crisis, the South Korean government has implemented massive
national projects to construct nation-wide, high-speed, cheap Internet networks in order
to boost its knowledge-based and techno-intensive national economy. In this sense,
about 24,000 broadband-based Internet-caf©s on every street corner in built-up areas
played a crucial role in the success of the online game business, not only because they
provided convenient and high-quality Internet service along with low price, but also
because Internet-caf©s were pivotal “off-line” places of the online game users™ commu-
nities. The second crucial factor is the game company™s technology-intensive, elaborate
efforts at constructing the cyberspace of Lineage as a social space in-between the real
and the imaginary. Lineage is a simulacrum consisting of not only hyper-real images of
basic realities, but also its own spatial and temporal scale. It is a distinct social space in
which game users share common time-space compressed experiences and socialize with
other game users in order to survive the “society” of Lineage in cyberspace. However,
at the same time, I suggested that we should not overestimate the relative autonomy of
the spatiality embedded in the online game, not only because it is primarily based on the
physical network of the broadband-based, Internet infrastructure, but also because it is
essentially and directly meets NCsoft™s economic purpose. In this sense, in order to
reinforce game users™ community activities in cyberspace and embed them in the off-line
real world, NCsoft has invested a significant amount of money in promoting festivals,
game tournaments, public conferences, and other off-line social events for the game user
In this chapter, I have conceptualized such a socio-cultural economy of the Internet
business as the economy of a “third space” or “in-between space.” Although the digital
economy could not be completely separate from convention economic principles, I argue
that it has emerging forms of new economic space not only in-between the real space and
the virtual space, but also between the production and the consumption of what is
produced. And, as we have seen the case of NCsoft Lineage, the third space is not just
social but also economic space with the game users™ “real” consumption of simulacra
(e.g., avatar game characters and items in Lineage) and its spread effects on other

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306 Park

economic sectors in the off-line world. In this sense, the emergence of the digital economy
containing certain forms of new economic space would give rise to fertile economic
environment in which many businesses especially such as e-business could explore new
economic opportunities. This perspective requires us to explore the new “spatiality” of
a digital economy. The task does not necessarily connote the economic geography of
distance and location, which explores the geographical dimensions of digital economy,
such as different production (and distribution) systems, organizational networks,
differential transaction costs, and geographical agglomerations. Rather, it behooves us
to have a flexible (and possibly multiple) “epistemological” sensibility to understand the
complicated entanglement of a digital economy with social and cultural spheres. In this
sense, further studies of digital economies, especially in relation to the digital contents
industry, such as the online game, should develop analytic frameworks to understand
the “third spatial economies” emerging in-between online and off-line. These studies
could include the synergetic socioeconomic relations of digital contents in-between
providers and customers, the flexible profit models based on this relation, the potential
and distinct separateness of the cyber-market generated by the broadband-based
Internet infrastructure, the economic implications of the Internet users™ active social
behaviors, and the specific socio-cultural contexts in which they are embedded.

I thank Dr. Kehal for his kind invitation to contribution to this book. I also want to thank
the anonymous reviewer, who provided me with a supportive critique and insightful
comments to improve this chapter. Most of all, I acknowledge that this chapter would
have been impossible without the great support from Dr. Stanley Brunn, who reviewed
several drafts and offered several constructive suggestions. Of course, I am completely
responsible for all possible errors and limits of this chapter.

The game™s record for the highest number of simultaneous players is 140,000,
including 100,000 in Korea and 40,000 in Taiwan. Jung-Hwan Kim, the global
relations manager for NCsoft, states that they estimate the cost of their network
downtime at $U.S. 400,000 per hour.
In mid-2003, NCsoft™s stock price sold for $132 U.S. a share, which is the highest
price for any component in South Korea™s digital economic sector.
NCsoft has the potential to surpass both Microsoft™s Xbox Live and Sony™s
broadband PlayStation networks in the race to dominate online gaming (Fulford,

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permission of Idea Group Inc. is prohibited.
Internet Economy of the Online Game Business in South Korea 307

Canada is next with about 11 broadband Internet connections per 100 inhabitants.
The other runner-up countries are far behind South Korea with fewer than 10
Internet connections per 100 inhabitants (OECD, 2002).
Even though Microsoft generates only $200 million in yearly revenue from Korea,
it has recently invested $500 million in Korea Telecom, in part to test plans for
ubiquitous computing (Fulford, 2003).
NCsoft relied on PC-caf©s for about 80 percent of its total revenues in 1997 (Lee and
Choudrie, 2002).

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