The word otaku spelled as お宅 is a polite way of saying “your house” and, by extension, “your household”. But in the early 1980s, a different meaning emerged, used to refer to hardcore anime/manga fans and later to hardcore fans of any hobby. Although its origins are uncertain, the earliest known examination of the word appeared in 1983 when Akio Nakamori published a series of articles titled “Otaku no Kenkyu”, describing the socially inept males who referred to each other as otaku.
While the word otaku always had a negative connotation, in 1989 it took a whole new dark dimension. Following the kidnapping and murder of four young girls, the home of the main suspect Tsutomu Miyazaki was searched and, in addition to evidence, revealed large amounts of anime and manga. The mass media latched on the label of “otaku” to describe the murderer and in the public consciousness the word quickly came to be associated with sociopaths.
In the years following this incident the stigma associated with the word otaku gradually died down. But even today it remains an unconventional lifestyle choice and labelling oneself as otaku is done with no small amount of defiance and/or self-deprecation.
Outside Japan the word never entered mainstream consciousness, and anime fans oblivious to the whole Miyazaki affair freely started using otaku amongst themselves as a badge of honor.