This is a response to this thread on the Gamplay.co.uk forum, as the bloody forum won't let me post it for some reason:
The article on Wikipedia explains it well.
otaku = house
Also used as an old pronoun similar to "you" (some characters in Animal Crossing use it)
Japanese otaku-subculture = Single man, works too much, can't get a girlfriend so obsesses over a certain (or many) anime character/series. These are the people who are more likely to play adult computer games.
Because of the wide appeal of video games, I believe it's only recently that the word has become associated with video games and technology due to the presence of all of these things in Akihabara - the place where many people say otaku go because that's what TV told them and so it became true. Otaku are still looked down on in Japan, not that they would say that to their faces though.
Otaku in the rest of the world = technogeek
I did once briefly consider explaining this to Kotaku when I was trying to get a job there, but I decided they'd never listen to me.
On a language note, it's interesting that this word has been slightly corrupted as there are many many more examples in Japanese where an English word has lost it's original meaning and now means something completely different.
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