Two weeks ago, Peter Jackson, director of the box-office-busting epics The Lord of the Rings and King Kong, announced: “I’m getting a little bored with films.” More and more, he said, he was looking forward to the release of computer games, not movies. “I do not have to keep delivering stories as movies. There are other things I can do,” he added, then announced he would be creating a series of tales based on the Halo video-game franchise.

To the casual cultural observer, this sounded like the hysterical laughter of Saruman just moments after he had finally accepted the dominion of Sauron, the Dark Lord of Mordor. Yet Jackson’s decision was influenced by a strange and growing trend in which film-school graduates, hardcore gamers and cutting-edge design studios are pulling apart the programming code of high-street video games to create a whole new style of movie-making. This new genre even has a name: machinima.

It has grown slowly from its earliest form: players keen on the shoot-’em-up game Quake used Replay mode to post short excerpts from their favourite “kills” online. In 1996, a two-minute replay of a particularly bloody slaughter called Diary of a Camper made players aware that a real narrative arc was possible. Although early flicks were set in bloodsoaked games such as World of Warcraft, Quake and the galactic conflict epic Halo, when the domestic re-creation game The Sims 2 introduced a built-in film-making utility, machinima began to explore psycho-drama, infidelity and even porn. It also proved attractive to female storytellers, who found the laser cannons of Halo a little too much like boys’ toys.

Since then, the form has exploded, and sites such as www.machinima.com host short films of surprising complexity. The alien battle game Half-Life has hosted A Few Good G-Men, a machinima spoofing the courtroom scene from Rob Reiner’s military drama, and Halo players can find This Spartan Life, a talk show in the Letterman format, with opening monologue, interviews and the Solid Gold Elite Dancers.

The US production company Rooster Teeth is behind two of machinima’s greatest hits: Red vs Blue and The Strangerhood. Both are a series of short films based on, and in part mocking, particular games. The Strangerhood (pictured right) uses The Sims to create a blend of the Big Brother house, Friends and Sartre’s In Camera. The animated characters have no past and no future and find themselves thrown together in an artificial house for no apparent reason. “We like the idea that video games make these huge and usually pointless narrative leaps to set up the world the game requires,” says Matt Hullum of Rooster Teeth. “They are leaps no one ever questions, but are absolutely ridiculous if you give them even a moment’s thought.”

It’s in Red vs Blue that this joke is most perfectly formed. The series is set in a specific level of the combat game Halo, where two military bases sit at each end of a long, rocky canyon. Players have to attack and defend the bases. Red vs Blue, however, documents the Space Marines’ downtime between battles. They wrestle with pointless military bureaucracy, while away hours of boredom, and often wonder, with a vague and hilarious existential anguish, what exactly they are doing there.

Red vs Blue offers the most obvious link to the fledgling experiments with cheap video cameras of 10 years ago that propelled Quentin Tarantino, Hal Hartley and Kevin Smith into the mainstream. Indeed, Village Voice described Red vs Blue as Clerks meets Star Wars. In making Clerks, Smith famously maxed out credit cards to film till-jockeys reflecting on the foibles of the convenience-store world. The Rooster Teeth team only had to buy a couple of Xbox consoles and editing software.

Although no machinima directors have yet made a studio-funded movie (Rooster Teeth, for instance, earns a living on the Red vs Blue merchandise it sells), there’s a growing weight of non-nerd support behind the form. Paul Marino, director of the Academy of Machinima Arts & Sciences (yes, there is one), runs an annual machinima festival.

At the same time, The Sims’ creator, EA Games, has commissioned a script by the British comedians Matt Horne and Ben Willbond for a Sims- based piece that will eventually be shown on a new site, www.simsshorts.com. The company is also launching a competition for UK writer/directors to have their machinima shorts shown at UK cinemas this autumn.

Marino sniffs when I ask if this indicates a glowing future for machinima directors entering the mainstream. “TV and cinema are looked on as the ultimate goal for anyone in the creative world,” he says. “But I think machinima will be equal to both of those. I can see a time when people will only want to work on machinima for its own sake.”

Until then, you might care to dig out Warthog Jump, a machinima classic based on the Halo game. Director Randall Glass realised that placing a particular type of explosive under a particular vehicle, the Warthog, would make it jump thousands of feet into the air. He then cut a series of such jumps to music clips. Sadly, he omitted Will Smith’s early-1990s slice of hip-hop lite, Boom! Shake the Room. Now, if only I could work out how to get this damn Sim to moonwalk.

To enter the Sims Shorts competition, see www.simsshorts.com