Last year Internet gaming company NCsoft found it had an embarrassing problem. The Seoul firm is the creator of Lineage, a medieval cyberworld in which players do battle with swords and shields, and use magical rings to change their identities. Players can swap weapons or buy and sell them using virtual assets. So popular is Lineage--and so competitive are its fans--that some players began buying and selling weapons with real money instead of virtual money. Identity rings were going for as much as $300 each. NCsoft didn't like that practice and barred two offenders from using the Web-based game. The barred 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 not just Lineage fans but also the whole nation a little cybercrazy. More than a third of South Korea's 47 million people are logging on to the Internet--one of the highest per-capita ratios of Web access in the world. In fact, South Korea is one of the most wired--and wireless--places on the planet. So faddish are all things cyber that hip young Korean men have adopted the scruffy, geeky dress of Microsoft chairman Bill Gates.
More astonishing still is how South Koreans have embraced the Internet as a tool for living, American-style. In what was a tradition-bound, dirt-poor farming country barely a generation ago, South Koreans are going online to network, day trade, date and prowl for sex. Ambitious start-up companies are churning out content to meet the billowing demand. Computer gaming has become a professional sport, with sponsorships, prize money and battles performed in public. "South Korea is a laboratory," says Daniel O'Neill, executive chairman of QoS Networks, a Dublin Internet company that plans to set up shop in Seoul next year. "You have a whole country that is a hotbed of Internet systems."
Being located in a Web-crazed country did not prevent shares of South Korea's Internet companies from plummeting after the global dotcom bubble burst last spring. (The country's high-tech kosdaq stock exchange has tumbled 80% since its peak in March--steeper than nasdaq's fall.) But that hasn't shattered South Korean faith in the New Economy. Info tech still accounts for more than 10% of the $400 billion economy, and that percentage must grow further if the country is to continue its economic climb. With its labor now expensive in international terms, and with few natural resources, South Korea has figured out that it can't continue to rely on exports of ships and low-end memory chips.