I'm going to try writing from the Blogger word processor instead of OpenOffice for once. In any case, I just wanted to say that and with that out of the way I recently visited Oxhorn's website who is a well known creator of World of Warcraft machinima and I realized I've done a lot of machinima watching in my life but mostly for World of Warcraft. Regardless of that, after thinking about that and my experience with machinima in general, I became curious and looked into it further, I discovered a few things with that curiosity. The term (machinima) itself (at least according to Wikipedia) comes from using "3D graphics rendering engines" to create a cinematic production. So to that end, pretty much everything related to video games that results in creating some sort of visual production can be technically considered a machinima, Wikipedia even lists Quake speed runs as a form of machinima, I guess what it comes down to is as long as it's more like a video than a game, it's considered a machinima, even a cut scene in a game would fall in that category in that case, unless it's an interactive cut scene anyway.
However at the same time machinima is generally more closely associated to user videos than it is to in game cut scenes, bringing it more close to fan fiction more than anything else (except it's a video of course). Despite that, machinima is still very popular, and while it takes quite a bit of practice and effort to truly become a expert at, it's requirements are probably the lowest in the field of computer video production making it somewhat easy to pick up and get started at.
From what I've learned about machinima even though I've never actually created one myself is that you need to first have a capturing software such as FRAPS, or wegame's client (which was suggested by Oxhorn in a tutorial video that he made and I even recorded one thing with it, however at the same time it also seemed to crash WoW constantly), after that is a engine or game to work with, as well as a way to import and tamper with the models, in WoW's case the game is WoW, and WoW model viewer would allow you to alter and edit models, you also need a movie editor like Windows Movie Maker or Adobe Creative Suite , and finally you need a way to mix and add sound effects. While all of that seems like a lot program-wise, if you're looking to make movies out of a game then it's much easier as the only external equipment it requires is a PC pretty much, unless you go the Adobe Creative Studios way, then that's also buying something that can be very pricey, but other than that all of the other programs can be downloaded from their home sites.
While I'm sure different people use tools differently, many people have gone into the machinima field and came out with at the very least a greater understanding of everything that goes on in making machinimas but some have also become fairly popular. A few of those teams or people are the Red vs Blue team that created the Blood Gultch Chronicles using Halo games, Oxhorn of course who created his own story universe using World of Warcraft, Myndflame who did the Illegal Danish series, and many others. So with that, I believe that machinima makers definitely have a big enough footprint to at least possibly become more of a widespread profession.
The main thing keeping most machinima makers from doing it professionally is probably their limit of license if they use a game to film their footage, while it definitely would get them popularity they are still within the agreement that they won't sell things created using the game's property unless they talk to a sales representative about it otherwise, or unless the game doesn't include that in it's signed agreements. As the agreement is pretty much part of all games, machinima makers don't really get to expand very far. However if they would be able to get the right to sell their works while still using a game's engine they probably could get very far and do well especially since many works of machinina makers are either very entertaining to watch, or expands on the game's world somehow, either way if the game is large and popular enough word of their works will probably get around quickly, and like a lot of the machinima creators I listed, they'll be able to have a good amount of fans and traffic.
So in the end, while I think the state of machinima is currently only as a hobby that people do if they want to, I believe that it has plenty of potential to either lead to more beneficial positions or to even possibly become a business in itself if companies become generous.
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