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FAIL is turn-of-the-century internet slang that came to popularity through image macros and short videos depicting situations with unfortunate outcomes. Traditionally, the verb “fail” has been a used to signify the opposite of “succeed,” to fall short of achieving a goal. Today, the word is also commonly used as an interjection to point out a person’s mistake or shortcoming, often regardless of its magnitude.
The earliest documented usage of the term “FAIL” can be traced to a Japanese 16-bit scrolling shooter game, Blazing Star (1998), often mocked for its grammatically incorrect “game over” message that reads:
“YOU FAIL IT!
YOUR SKILL IS NOT ENOUGH-
SEE YOU NEXT TIME- BYE BYE.”
While the exact origin of “FAIL,” as an interjection, remains unknown, the earliest appearance of “FAIL” on slang repository Urban Dictionary  dates back to July 22nd, 2003.
either an interjection used when one disapproves of something, or a verb meaning approximately the same thing as the slang form of suck.
1] “you actually bought that? FAIL”
2] “this movie fails.”
According to Google Trends, Internet users began exchanging and searching for pictures and videos labeled with “FAIL” as early as in 2004.
This use of “fail” not as a part of speech but as a stand-alone interjection was further popularized by message board sites like 4chan and Something Awful forums. Due to the increased popularity of FAIL image macros and videos, the Cheezburger Network launched FAILblog , an aggregator of FAIL-related media, in May 2008.
On August 9th, 2009, New York Times reported, in almost verbatim to Know Your Meme Episode, on the FAIL phenomenon.
This punchy stand-alone fail most likely originated as a shortened form of “You fail” or, more fully, “You fail it,” the taunting “game over” message in the late-’90s Japanese video game Blazing Star, notorious for its fractured English.