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A popular pastime of many Caledonian citizens, pioneered by Oolon Sputnik's efforts during the Neualtenburg War. Many immersive gaming environments provide players with unique opportunities to script and build their own creative dramas using their gaming clients. Machinima is an industry term for the emerging technology used to create immersive environment films using computer based video capture and editing technology. Second Life is considered an ideal environment for creating machinima films, due to user's ability to create their own content.

The Academy of Machinima Arts & Sciences defines machinima as "animated filmmaking within a real-time virtual 3-D environment". In other 3-D animation methods, creators can control every frame and nuance of their characters and must consider issues such as key frames and in-betweening. Machinima creators leave many rendering details to, and are thus limited by, their host 3-D environments. Many machinima characters have difficulty crying, hugging, and sitting.

As in live action, machinima is recorded in real-time, and real people are involved in performing parts and controlling the camera. In contrast, machinima involves less expensive, digital sets and special effects. Science-fiction and historical settings are feasible. Explosions and stunts can be tried and repeated without monetary cost and risk of injury, and physical constraints of the host environment may differ from those of reality.

Currently, Caledon has the Caledon Machinima Guild, made up of those interested in learning about the art of making machinima as well as hosting machinima festivals.