The NY Times magazine article on "Red vs. Blue" is good reading..
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...
...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...
...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?
ure, 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.)
This is one more instance of the maxim that once a medium for communication and content delivery is created, the end consumer will deconstruct the relationships between content creation and distribution in ways unforseen by the creators, as anyone who's seen a 2 year old with a VCR knows.
Savvy producers of content and content creation/rendering devices will let consumers mess with it to create new content...a sort of Mystery Science Theater 3000 for everyone...
Red vs. Blue videos can be watched here. Some are laugh out loud funny.