Often (mis)used interchangeably, these terms in fact refer to two different types of experience tailoring.

Customization allows the user to select preset options or record parameters which are remembered and applied by the system. An example of customization on websites is a user profile.

Personalization is autonomous and attempts to learn about the user and create and provide content based on actions and choices. Recommendation systems, such as those available on Amazon, are perhaps the most well-known type. A specific example of personalization is location-based services (e.g. providing coupon, advertising events) in mobile technologies.

In short, customization questions and personalization observes.

In Video Games

Customization has become a staple of the video game experience. Since the very early days of the NES, games have allowed the player to customize his or her experience even simply by allowing him or her to input his or her name in place of a character's default name. Many games offer up an "options" menu, in which the player can customize a variety of aspects by choosing from preset values (e.g. music volume). Recordable parameters can be as complex as user-drawn images (such as the imp mask in Okami).

Personalization has been struggling to catch up with customization. A hot topic in personal computing and community websites, personalization has yet to breach digital video games. The complexity of the programming required and the restrictions gaming platforms have in observing the player's actions may account for its absence so far. It may be that the video game is not the most suitable medium for personalization technology, which has primarily concerned itself with multi-user systems, such as online stores and news providers (Linden, 2008). Perhaps, being a relatively new topic, personalization has not had a chance to make its mark in the gaming world yet.

In this article I discuss possibilities for personalization in video games.

References:

Linden, G. (2008, March). People who read this article also read... IEEE Spectrum, 45(3), 46-50.