Game software can be characterized into four main categories: computer games, video games, arcade games, and Internet games. They consist of interactive multimedia based products such as: adventure, arcade, flight simulation, strategy, sports, shoot-em-up, fighting, and kids' games.
Computer games are basically created to run on personal computers. Video games require specialized hardware (i.e., the Sony Playstation, Nintendo, etc.) (Dixon and Karboulonis, 1999). .
Internet Games are divided into two sub-categories: Server based games and peer-to-peer play. Server based games are downloaded from web sites and are usually multi-player and capable of supporting thousands of users simultaneously. Revenues for server based games usually involve pay-per-time and subscription fees. Peer-to-peer play involves downloading software or purchasing CD-ROMs and dialing into either an aggregator or friend's server. Revenues for peer-to-peer games are based on advertising and e-commerce (Kissel, 1999).
The game industry in Korea sprung up in 1989 when Korean conglomerates entered in video game industry (Hwang, 1995). They only relied on importing all parts of consoles and software in video game. But most of them went out of business mainly because the domestic market was distorted by chronic smuggling (the White Paper, 1997). .
Since the late 1980s, PC games have been the most popular entertainment among youngsters as personal computers in the home have become the norm. Recognizing the potential growth in the market, many small Korean companies have concentrated on development of PC game software since the mid-90s. .
Since the advent of "Starcraft," developed by a U.S. software company, "PC Rooms or Game Rooms" for mainly playing the game have quickly become an unique culture or one of room culture, along with "noraebang" (Karaoke room). Thanks to this trend like a social phenomenon, Korea's online game industry has been booming as local online game providers have enjoyed unprecedented growth during the last two years.