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Why the term "MUD" is still used instead of a better one sometimes is a bit difficult to explain to other people, especially those who don't play MUDs. Aside from disagreement over what it stands for, it just isn't a flattering term (and the "D" just doesn't sound good in any case).
And if it has to sound similar to MUD, maybe MUG (Multi-User Game) would be better sounding. Of course, one could also come up with dozens of better sounding acronyms. :-/
*shrug*
RPG certainly isn't a very good term since most RPGs don't involve much, if any, RPing.
Take care,
Jason
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