Machinima is a portmanteau of machine cinema, it is both a collection of associated production techniques and a film genre defined by those techniques. As a production technique, the term concerns the rendering of computer-generated imagery (CGI) using real-time, interactive (usually game) 3D engines. Engines from first-person shooter and role-playing simulation video games are typically used. Consequently, the rendering is done in real-time using PCs (either using the computer of the creator or the viewer), rather than with complex 3D engines. As a film genre, the term refers to movies created by the techniques described above. Usually, machinima productions are produced using the tools (demo recording, camera angle, level editor, script editor, etc.) and resources (backgrounds, levels, characters, skins, etc.) available in a game. (Description adapted from Wikipedia).
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