The word “pwned”, a gamer term meaning complete and utter defeat, is derived from an earlier hacker’s term, “owned” which meant to gain access to the root controlling another’s computer. The received explanation is that a child who had defeated over 100 opponents in online World of Warcraft was trying to type “owned” when he missed and hit the -p.
The theory that it comes from chess and refers to checkmate by the use of pawns, is not accepted and has in fact been debunked. There is also no truth to the theory that it comes from a broken sign at a Pwn Shop.
Difference between Pwned and Owned according to Will Smith... maybe: “Pwned” should be used when “Owned” just isn’t strong enough. For example if you were kicked in the balls you were Owned. Now say instead of getting kicked in the balls with just an ordinary shoe, there were spikes on it and instead of it just hurting they were actually torn open, now you have been PWNED! (from uncylopedia.wiki)
How is it pronounced? The word exists primarily in the written world, so for the time being no pronunciation guide is necessary. The inner voice may wish to mentally pronounced it usually as “OOOOOOOOWNED” supplying the increased emotional intensity commensurate with that level of victorious achievement. Someone suggested “p-owned” on the theory that it was a contraction of “professionally owned”, but I doubt that will catch on.
This is me missing William Safire. Sorry...
I have heard a similar story many times. I do play World of Warcraft, and have heard other players use the term many times. It is pronounced "poned."