Whenever a friend discovered a particularly cool stunt inside Halo — for example, obliterating an enemy with a new type of grenade toss — Burns would record a video of the stunt for posterity. (His friend would perform the move after Burns had run a video cord from his TV to his computer, so he could save it onto his hard drive.) Then he’d post the video on a Web site to show other gamers how the trick was done. To make the videos funnier, sometimes Burns would pull out a microphone and record a comedic voice-over, using video-editing software to make it appear as if the helmeted soldier himself were doing the talking.

Then one day he realized that the videos he was making were essentially computer-animated movies, almost like miniature emulations of “Finding Nemo” or “The Incredibles.” He was using the game to function like a personal Pixar studio. He wondered: Could he use it to create an actual movie or TV series?

Burns’s group decided to give it a shot. They gathered around the Xbox at Burns’s apartment, manipulating their soldiers like tiny virtual actors, bobbing their heads to look as if they were deep in conversation. Burns wrote sharp, sardonic scripts for them to perform. He created a comedy series called “Red vs. Blue,” a sort of sci-fi version of “M*A*S*H.” In “Red vs. Blue,” the soldiers rarely do any fighting; they just stand around insulting one another and musing over the absurdities of war, sounding less like patriotic warriors than like bored, clever video-store clerks. The first 10-minute episode opened with a scene set in Halo’s bleakest desert canyon. Two red soldiers stood on their base, peering at two blue soldiers far off in the distance, and traded quips that sounded almost like a slacker disquisition on Iraq:

Red Soldier: “Why are we out here? Far as I can tell, it’s just a box canyon in the middle of nowhere, with no way in or out. And the only reason we set up a red base here is because they have a blue base there. And the only reason they have a blue base over there is because we have a red base here.”

When they were done, they posted the episode on their Web site (surreptitiously hosted on computers at work). They figured maybe a few hundred people would see it and get a chuckle or two.

Instead, “Red vs. Blue” became an instant runaway hit on geek blogs, and within a single day, 20,000 people stampeded to the Web site to download the file. The avalanche of traffic crashed the company server. “My boss came into the office and was like, ‘What the hell is going on?’” Burns recalls. “I looked over at the server, and it was going blink, blink, blink.”

Thrilled, Burns and his crew quickly cranked out another video, then another. They kept up a weekly production schedule, and after a few months, “Red vs. Blue” had, like some dystopian version of “Friends,” become a piece of appointment viewing. Nearly a million people were downloading each episode every Friday, writing mash notes to the creators and asking if they could buy a DVD of the collected episodes. Mainstream media picked up on the phenomenon. The Village Voice described it as “‘Clerks’ meets ‘Star Wars,’” and the BBC called it “riotously funny” and said it was “reminiscent of the anarchic energy of ‘South Park.’” Burns realized something strange was going on. He and his crew had created a hit comedy show — entirely inside a video game.

VIDEO GAMES HAVE NOT ENJOYED good publicity lately. Hillary Clinton has been denouncing the violence in titles like Grand Theft Auto, which was yanked out of many stores last month amid news that players had unlocked sex scenes hidden inside. Yet when they’re not bemoaning the virtual bloodshed, cultural pundits grudgingly admit that today’s games have become impressively cinematic. It’s not merely that the graphics are so good: the camera angles inside the games borrow literally from the visual language of film. When you’re playing Halo and look up at the sun, you’ll see a little “lens flare,” as if you were viewing the whole experience through the eyepiece of a 16-millimeter Arriflex. By using the game to actually make cinema, Burns and his crew flipped a switch that neatly closed a self-referential media loop: movies begat games that begat movies.

And Burns and his crew aren’t alone. Video-game aficionados have been creating “machinima” — an ungainly term mixing “machine” and “cinema” and pronounced ma-SHEEN-i-ma — since the late 90’s. “Red vs. Blue” is the first to break out of the underground, and now corporations like Volvo are hiring machinima artists to make short promotional films, while MTV, Spike TV and the Independent Film Channel are running comedy shorts and music videos produced inside games. By last spring, Burns and his friends were making so much money from “Red vs. Blue” that they left their jobs and founded Rooster Teeth Productions. Now they produce machinima full time.

It may be the most unlikely form of indie filmmaking yet — and one of the most weirdly democratic. “It’s like ‘The Blair Witch Project’ all over again, except you don’t even need a camera,” says Julie Kanarowski, a product manager with Electronic Arts, the nation’s largest video-game publisher. “You don’t even need actors.”

Back in college, Burns and another Rooster Teeth founder, Matt Hullum, wrote and produced a traditional live-action indie movie. It cost $9,000, required a full year to make and was seen by virtually no one. By contrast, the four Xboxes needed to make “Red vs. Blue” cost a mere $600. Each 10-minute episode requires a single day to perform and edit and is viewed by hordes of feverish video-game fans the planet over.

More than just a cheap way to make an animated movie, machinima allows game players to comment directly on the pop culture they so devotedly consume. Much like “fan fiction” (homespun tales featuring popular TV characters) or “mash-ups” (music fans blending two songs to create a new hybrid), machinima is a fan-created art form. It’s what you get when gamers stop blasting aliens for a second and start messing with the narrative.

And God knows, there’s plenty to mess with. These days, the worlds inside games are so huge and open-ended that gamers can roam anywhere they wish. Indeed, players often abandon the official goal of the game — save the princess; vanquish the eldritch forces of evil — in favor of merely using the virtual environment as a gigantic jungle gym. In one popular piece of Halo machinima, “Warthog Jump,” a player cunningly used the game to conduct a series of dazzling physics experiments. He placed grenades in precise locations beneath jeeps and troops, such that when the targets blew sky-high, they pinwheeled through the air in precise formations, like synchronized divers. Another gamer recorded a machinima movie that poked subversive fun at Grand Theft Auto. Instead of playing as a dangerous, cop-killing gangster, the player pretended he was a naive Canadian tourist — putting down his gun, dressing in tacky clothes and simply wandering around the game’s downtown environment for hours, admiring the scenery.

SO WHAT’S IT LIKE to actually shoot a movie inside a game? In June, I visited the Rooster Teeth offices in Buda, Tex., a tiny Austin suburb, to observe Burns and his group as they produced a scene of “Red vs. Blue.” Burns, a tall, burly 32-year-old, sat in front of two huge flat-panel screens, preparing the editing software. Nearby were the two Rooster Teeth producers who would be acting on-screen: Geoff Ramsey, a scraggly-bearded 30-year-old whose arms are completely covered in tattoos of fish and skulls, and Gustavo Sorola, a gangly 27-year-old who sprawled in a beanbag chair and peered through his thick architect glasses at the day’s e-mail. They were fan letters, Sorola told me, that pour in from teenagers who are as enthusiastic as they are incoherent. “The way kids write these days,” he said with a grimace. “It’s like someone threw up on the keyboard.”

In the script they were acting out that day, a pair of “Red vs. Blue” soldiers engaged in one of their typically pointless existential arguments, bickering over whether it’s possible to kill someone with a toy replica of a real weapon. The Rooster Teeth crew recorded the voice-overs earlier in the day; now they were going to create the animation for the scene.

Burns picked up a controller and booted up Halo on an Xbox. He would act as the camera: whatever his character saw would be recorded, from his point of view. Then Sorola and Ramsey logged into the game, teleporting in as an orange-suited and a red-suited soldier. Burns posed them near a massive concrete bunker and frowned as he scrutinized the view on the computer screen. “Hmmmm,” he muttered. “We need something to frame you guys — some sort of prop.” He ran his character over to a nearby alien hovercraft, jumped in and parked it next to the actors. “Sweet!” he said. “I like it!”

In a “Red vs. Blue” shoot, the actors all must follow one important rule: Be careful not to accidentally kill another actor. “Sometimes you’ll drop your controller and it unintentionally launches a grenade. It takes, like, 20 minutes for the blood splatters to dry up,” Ramsey said. “Totally ruins the scene.”

Finally, Burns was ready to go. He shouted, “Action!” and the voice-overs began playing over loudspeakers. Sorola and Ramsey acted in time with the dialogue. Acting, in this context, was weirdly minimalist. They mashed the controller joysticks with their thumbs, bobbing the soldiers’ heads back and forth roughly in time with important words in each line. “It’s puppetry, basically,” Ramsey said, as he jiggled his controller. Of all the “Red vs. Blue” crew members, Ramsey is renowned for his dexterity with an Xbox. When a scene calls for more than five actors onstage, he’ll put another controller on the ground and manipulate it with his right foot, allowing him to perform as two characters simultaneously.

As I watched, I was reminded of what initially cracked me up so much about “Red vs. Blue”: the idea that faceless, anonymous soldiers in a video game have interior lives. It’s a “Rosencrantz and Guildenstern” conceit; “Red vs. Blue” is what the game characters talk about when we’re not around to play with them. As it turns out, they’re a bunch of neurotics straight out of “Seinfeld.” One recruit reveals that he chain-smokes inside his airtight armor; a sergeant tells a soldier his battle instructions are to “scream like a woman.” And, in a sardonic gloss on the game’s endless carnage, none of the soldiers have the vaguest clue why they’re fighting.

Yet as I discovered, real-life soldiers are among the most ardent fans of “Red vs. Blue.” When I walked around the Rooster Teeth office, I found it was festooned with letters, plaques and an enormous American flag, gifts from grateful American troops, many of whom are currently stationed in Iraq. Isn’t it a little astonishing, I asked Burns when the crew went out in the baking Texas sun for a break, that actual soldiers are so enamored of a show that portrays troops as inept cowards, leaders as cynical sociopaths and war itself as a supremely meaningless endeavor? Burns laughed, but said the appeal was nothing sinister.

“‘Red vs. Blue’ is about downtime,” he said. “There’s very little action, which is precisely the way things are in real life.”

“He’s right,” Ramsey added. He himself spent five years in the army after high school. “We’d just sit around digging ditches and threatening to kill each other all day long,” he said. “We were bored out of our minds.”

PERHAPS THE MOST UNUSUAL THING about machinima is that none of its creators are in jail. After all, they’re gleefully plundering intellectual property at a time when the copyright wars have become particularly vicious. Yet video-game companies have been upbeat — even exuberant — about the legions of teenagers and artists pillaging their games. This is particularly bewildering in the case of “Red vs. Blue,” because Halo is made by Bungie, a subsidiary of Microsoft, a company no stranger to using a courtroom to defend its goods. What the heck is going on?

As it turns out, people at Bungie love “Red vs. Blue.” “We thought it was kind of brilliant,” says Brian Jarrard, the Bungie staff member who manages interactions with fans. “There are people out there who would never have heard about Halo without ‘Red vs. Blue.’ It’s getting an audience outside the hardcore gaming crowd.”

Sure, Rooster Teeth ripped off Microsoft’s intellectual property. But Microsoft got something in return: “Red vs. Blue” gave the game a whiff of countercultural coolness, the sort of grass-roots street cred that major corporations desperately crave but can never manufacture. After talking with Rooster Teeth, Microsoft agreed, remarkably, to let them use the game without paying any licensing fees at all. In fact, the company later hired Rooster Teeth to produce “Red vs. Blue” videos to play as advertisements in game stores. Microsoft has been so strangely solicitous that when it was developing the sequel to Halo last year, the designers actually inserted a special command — a joystick button that makes a soldier lower his weapon — designed solely to make it easier for Rooster Teeth to do dialogue.

“If you’re playing the game, there’s no reason to lower your weapon at all,” Burns explained. “They put that in literally just so we can shoot machinima.”

Other game companies have gone even further. Many now include editing software with their games, specifically to encourage fans to shoot movies. When Valve software released its hit game Half-Life 2 last year, it included “Faceposer” software so that machinima creators could tweak the facial expressions of characters. When the Sims 2 — a sequel to the top-selling game of all time — came out last year, its publisher, Electronic Arts, set up a Web site so that fans could upload their Sims 2 movies to show to the world. (About 8,000 people so far have done so.)

Still, it’s one thing for gamers to produce a jokey comedy or a music video. Can machinima actually produce a work of art — something with serious emotional depth? A few people have tried. In China, a visual artist named Feng Mengbo used the first-person-shooter game Quake III to produce Q4U, in which the screen is filled with multiple versions of himself, killing one another. Players’ relationships with constant, blood-splattering violence is a common subject in game art. Last year, the 31-year-old artist Brody Condon produced an unsettling film that consisted of nothing but shots of himself committing suicide inside 50 different video games.

“I try to come to terms with what taking your life means in these games,” Condon says. “I’m trying to understand, spiritually, your relationship with an avatar on the screen.”

But even machinima’s biggest fans admit that the vast majority of machinima is pretty amateurish. “It’s like if some friends of mine all broke into a movie set, and we all got to use all the cameras and special-effects equipment,” says Carl Goodman, director of digital media at the American Museum of the Moving Image, which began to hold an annual machinima festival two years ago. “We wouldn’t quite know how to use it, but we’d make some pretty interesting stuff.”

Yet as Goodman points out, there’s a competing proposition. Machinima does not always strive to emulate “realistic,” artistic movies. On the contrary, it is often explicitly devoted to celebrating the aesthetics of games — the animations and in-jokes, the precise physics. Most machinima is probably meaningless to people who don’t play games, much as ESPN is opaque to anyone who doesn’t watch sports. But for those who do play Halo, it was genuinely thrilling to see something like “Warthog Jump,” with its meticulously synchronized explosions.

The Rooster Teeth crew has its own hilariously stringent rule for making machinima: no cheating. When they shoot “Red vs. Blue,” they do not use any special effects that are not organically included in the game; everything you see in an episode of “Red vs. Blue” could in theory have taken place during an actual game of Halo, played by a fan in his bedroom. It’s a charmingly purist attitude, a sci-fi version of the “Dogma” school of indie film, which argues that movies are best when cinematic trickery is kept to a minimum.

ONE EVENING IN NEW YORK, I visited with Ethan Vogt as he and his machinima team shot a car-chase scene for a Volvo promo. Vogt and two producers sat at computers, logged into a multiplayer game; each producer controlled a car racing through crowded city streets, while Vogt controlled a free-floating “camera” that followed behind, recording the visuals. The vehicles — an enormous 1972 Chevy Impala and a Volvo V50 — screamed along at about 60 miles an hour, fishtailing through corners while plowing into mailboxes, lampposts and, occasionally, clots of pedestrians. The lead car burst into flames. “That’s great,” Vogt said. “That’s great.”

Though it shares with independent filmmaking a do-it-yourself aesthetic, machinima inverts the central tradition of indie film: smallness. With their skimpy budgets, indie directors tend to set movies in kitchens or living rooms — and focus instead on providing quality acting and scripts. Machinima, in contrast, often has horribly cheesy acting and ham-fisted, purple-prose stories — but they’re set in outer space. Want massive shootouts? Howling mob scenes? Roman gladiatorial armies clashing by night? No problem. It is the rare form of amateur film in which the directors aspire to be not Wes Anderson but George Lucas.

Indeed, with video games played on computers, it is now possible to build an entire world from scratch. The core of any video game is its game engine, the software that knows how to render 3-D objects and how to realistically represent the physics of how they move, bounce or collide. But the actual objects inside the game — the people, the cars, the guns, even the buildings — can be altered, tweaked or replaced by modifications, or “mods.” Mods do not require any deep programming skills; indeed, almost any teenager with a passing acquaintance in graphic-design software can “re-skin” a character in a game to make it look like himself, for instance. (Xbox and PlayStation games, in comparison, are much harder to mod, because the consoles are locked boxes, designed to prevent players from tampering with the games.)

I was able to see modding in action one night when I visited the ILL Clan, a pioneering machinima group. Their headquarters are the kitchen table in the cramped one-bedroom Brooklyn apartment of Frank Dellario; a lanky, hyperkinetic 42-year-old, he sat on a rickety folding chair, pecking at a keyboard. The table was littered with four computer screens and laptops, the remnants of take-out sushi and a hopelessly tangled morass of computer cords and joysticks; a huge wide-screen TV lurked behind them for viewing their work. On the night I visited, they were using a game engine called Torque to shoot a short heist movie for Audi, in which two thugs beat up a concert violinist and make off with an antique violin in a van.

To quickly create a gritty-looking city, Dellario and his colleague — ILL Clan’s co-founder, Matt Dominianni — hired a local artist to build a generic-looking urban intersection inside the game. To customize it, Dominianni went onto Google, found snapshots of a few seedy stores (an adult bookstore, a tattoo parlor and a furniture outlet) and digitally pasted them onto the front of the buildings. Then they went to a site called Turbo-Squid, a sort of Amazon for virtual in-game items, and for $45 bought a van that could be plunked down inside the game. When I arrived, they were browsing the site and contemplating buying a few women. “My God, look at this one,” Dellario marveled, as he clicked open a picture of an eerily realistic 3-D brunette named Masha. “I’m going to marry this woman. They’ve finally broken through to total reality.”

Dellario put the van into the correct location in the scene, then logged into the game to figure out the camera angle for this shot. He frowned. It didn’t look right. The lighting was all off, with shadows falling in the wrong places.

Dominianni figured out the problem: “The sun is supposed to be at high noon. It’s in the wrong place.”

“Oh, yeah,” Dellario said. “Let me move it.” He pulled up a menu, clicked on the “sun” command, and dragged it across the sky.

Now they were finally ready to shoot. Dellario realized they needed an extra pair of hands to manipulate one of the thugs. “Want to act in this scene?” Dellario asked, and he handed me a joystick.

I sat down at one of the computers and took control of “Thug1,” a brown-haired man in a golf shirt and brown pants, carrying the stolen violin. Dominianni was playing “Thug2.” Our characters were supposed to look around to make sure the coast is clear, then jump in the truck and race off. Dellario gave me my motivation: “It’s like you hear a suspicious noise. You’re nervous.” I used the joystick to practice moving my virtual character, craning its neck — my neck? — back and forth. I have played plenty of video games, but this felt awfully odd. Usually when I am inside a game, I’m just worried about staying alive while the bullets whiz past my ears. I’ve never had to emote.

While Dellario and Dominianni fiddled with the camera angle, I grew impatient and wandered around, exploring the virtual set. I peered in a few shop windows — they were strikingly photorealistic, even up close. Then I walked down an alley and suddenly arrived at the end of the set. It was like a tiny Western town in the desert: once you got beyond the few clustered buildings, there was nothing there — just a vast, enormous plain, utterly empty and stretching off infinitely into the distance.

THIS SPRING, ELECTRONIC ARTS DECIDED to promote the Sims 2 by hiring Rooster Teeth to create a machinima show using the game. Called “The Strangerhood,” it would be freely available online. “The Strangerhood” is a parody of reality TV: a group of people wake up one day to discover that they are living in new houses, and they can’t remember who they are or how they got there. In the Sims 2, the animated people are impressively Pixar-like and expressive, making “The Strangerhood” even more like a mainstream animated show than “Red vs. Blue”; you could almost imagine watching it on Saturday morning.

The problem is, the Sims 2 has turned out to be incredibly difficult to shoot with. When the Rooster Teeth gang uses Halo for machinima, the characters are mere puppets and can be posed any way the creators want. But in the Sims 2, the little virtual characters have artificial intelligence and free will. When you’re playing, you do not control all the action: the fun is in putting your Sims in interesting social situations, then standing back and watching what they’ll do. When Rooster Teeth’s Matt Hullum builds a virtual set and puts the “Strangerhood” characters in place for a shoot, he’s never quite sure what will happen. To shoot a scene in which two men wake up in bed together, Hullum had to spend hours playing with the two characters — who are nominally heterosexual — forcing them into repeated conversations until they eventually became such good friends they were willing to share a bed. Shooting machinima with Sims is thus maddeningly like using actual, human stars: they’re stubborn; they stage hissy fits and stomp off to their trailers.

“We’ll do three or four takes of a scene, and one of the Sims will start getting tired and want to go to sleep,” Hullum said. “It’s just like being on a real set. You’re screaming: ‘Quick, quick, get the shot! We’re losing light!’”

Hullum showed me a typical “Strangerhood” scene. He put Nikki, a young ponytailed brunette in a baseball cap, in the kitchen to interact with Wade, a slacker who looked eerily like a digital Owen Wilson. (To give Wade a mellow, San Francisco vibe, Hullum programmed him to move at a pace 50 percent slower than the other characters.) Hullum pointed to Nikki’s “mood” bar; it was low, which meant she was in a bad mood and wouldn’t want to talk. “When they’re bored, you have to lock them in a room alone for a few hours until they start to crave conversation,” Hullum said. He tried anyway, prodding Wade to approach her and talk about food, one of Nikki’s favorite subjects. It worked. The two became engrossed in a conversation, laughing and gesticulating wildly. “See, this footage would be great if we were shooting a scene where these guys are maybe gossiping,” Hullum mused, as he zoomed the camera in to frame a close-up on Wade. Then Nikki started to yawn. “Oh, damn. See — she’s getting bored. Oh, no, she’s walking away,” Hullum said, as the little virtual Nikki wandered out of the room. “Damn. You see what we have to deal with?”

The audience for “The Strangerhood” has not exploded the way “Red vs. Blue” did. The project is a gamble: its creators hope it will break out of machinima’s geeky subculture and vault into the mainstream.

Though in a way, Hullum said, the mainstream isn’t always a fun place to be, either. Before he returned to Austin to work on “Red vs. Blue,” he spent six miserable years in Hollywood working on second-rate teen movies with big budgets, like “Scooby-Doo” and “The Faculty.”

“So now to come to this, where we have total creative control of our own stuff, it’s amazing,” Hullum said, as he watched Nikki walk out of the house in search of a more interesting conversation. “I just pray we can keep this going. Because if we can’t, I’m in big trouble.”

Clive Thompson is a contributing writer for the magazine.