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 call the police.
That's how it is today in South Korea—the Internet seems to have made the whole nation a little crazy. Housewives are into it, students are teetering on the brink of addiction—even grandma and grandpa are developing a taste for cyberspace. More than a third of South Korea's 47 million people are logging onto the Internet—that's one of the highest ratios of Web access in the world. Over half of Koreans have mobile phones, and high-speed broadband access is coming in fast, far ahead of Japan, the country's traditional rival, and catching up with the U.S. The result: South Korea is one of the most wired—and wireless—places on the planet.
More astonishing still is how Koreans have embraced the Internet as a tool for living. They are going online to network, day trade, date and prowl for sex. Some have gotten married in cyberspace, others visit deceased relatives in a virtual memorial hall. Ambitious start-up companies are churning out content to meet the billowing demand, putting the country at the cutting-edge of new modes of online entertainment. Computer gaming, for example, has become a professional sport, with sponsorships, prize money and battles performed in public. "Korea is a laboratory," says Daniel O'Neill, executive chairman of QoS Networks, a Dublin Internet company that plans to set up shop in Korea next year. "You have a whole country that is a hotbed of Internet systems."
Being located in the most Web-crazed country in the world did not prevent shares of Korea's Internet companies from plummeting after the global dotcom bubble burst last spring. (The high-tech KOSDAQ has tumbled a grim 61% since its peak in March—even worse than the NASDAQ's fall.) But stock market woes and the wobbles of Old Economy conglomerates like Hyundai, have not made Koreans lose faith in the New Economy. Information technology already accounts for more than 10% of Korea's $400 billion economy—and that percentage must grow further if the country is to continue its economic ascent. With pricey workers and few natural resources, Korea has figured out it can't continue to rely on exports of ships and low-end memory chips to juice the economy.
Which is why Korea, with the single-minded aggressiveness that made it a name in a slew of export industries, has rallied around the Internet. Says Shin Yoo Jin, chief technology officer at dotcom Dadaworlds: "For Koreans, the Internet isn't just a technology or a new discovery any more—it has become a part of daily life they can't do without." Three years ago, games like Lineage didn't exist. Even if they had, nobody had access to the high-speed, broadband pipes needed to load their complex graphics. But in the past few years, Korea has done a lot of things right. The government put the building blocks in place, laying high-speed lines and encouraging foreign investment in information technology industries. It slashed red tape for Internet start-ups and deregulated the telecom industry with impressive foresight. The result: Internet access rates in Korea were dirt cheap just as the Net started to take off.
Today, more than 3 million homes have high-speed Internet access. That's double the number of just five months ago. (The figure in Japan, by contrast, is a puny 450,000, and dial-up access to the Internet is still prohibitively expensive.) Internet-ready phone lines are standard equipment in new Korean apartment blocks.
For younger Koreans, the biggest catalyst for the Web craze was the so-called "PC rooms": Internet cafes offering high-speed access to the Web (though sometimes not coffee) for as little as a dollar a minute. They sprouted like mushrooms in the wake of the Asian crisis as Koreans thrown out of traditional jobs decided to take a gamble on the new high-tech economy. Some are crude, with exposed ventilation pipes and bare concrete walls, others are fancier, decorated with New-Age motifs and comfortable chairs. Three years ago, there was a handful of such cafes; today there are at least 20,000. You can't throw a rock in Seoul without hitting one, and at any hour of the day or night people are playing games, sending e-mail, doing homework or looking for online love. Cho Jung Wan is spending up to 10 hours a day playing Lineage. "After collecting weapons and stuff online," he says, "I feel like I've gotten rich in the real world."
The PC rooms started something big: a national love affair with the Internet. The fast pace of life online strummed some impatient chord of the national character, and Koreans seized the Net as a tool to make their lives easier, more convenient and, sometimes, a lot more interesting.