Rotterdam, city of industrial shipping and banging trance music, is also the venue for the Rotterdam Film Festival. Braving the biting winds one February weekend, I went over to investigate its “Exploding Cinema” arm, which is inviting videogames into the festival fold.

Not just any videogames, however. Packaged commercial product – no matter how beautiful, like Ico – is not welcome. Instead, a groovily dank, smoky club space called Off_Corso, shabbily wired up with old monitors and keyboards like the Nebuchadnezzar, has been taken over for the duration of the festival by an exhibition of “critical games”. Much of the time, this involves people (some of them call themselves artists) taking pre-existing game products or engines and twisting them in order to generate explicit political or aesthetic propaganda.

I liked the cheeky concept of Velvet-Strike, for example, an example of what you might call aesthetic counter-terrorism. In response to the preponderance of Osama Bin Laden skins on jingoistic US gaming servers after the announcement of Bush’s “war on terrorism”, Anne Marie Schleiner developed a series of provocatively pacifist graphical “spray paints” which can be used as graffiti on Counter-Strike servers. The video here is a compilation of such stealthy spraying in the midst of the macho violence: gunman silhouettes form a big heart; a teddy bear holds a rifle; two soldiers embrace in various homoerotic poses. Sprays with provocative verbal slogans include “Hostages of Military Fantasy”; “We Are All Iraqis Now”; or, with true geek wit, “bind mouse1 “+dropweapon”".

Velvet-Strike is not a game but an attitude. The idea of invading online spaces that exist for no other reason than to gratify militaristic fantasies, and then gently defacing them with anti-war slogans, is not just funny (though funny it is), but also a demonstration of how online gameworlds, even those of apparently simple shooters, are already sophisticated enough to be arenas of political debate, sites of symbolic activism.

Similar but less subtle things are going on, meanwhile, in a self-contained game called Waco Resurrection, a third-person shooter built using the open-source Torque game engine, in which you take the role of a repeatedly resurrected David Koresh attempting to gun down the waves of FBI grunts swarming over your headquarters. Power-ups may be found in the form of glowing Bibles that drop from the sky, and they can be used as spells by speaking into the microphone embedded in your full-head rubber David Koresh mask. (Possibly for reasons of embarrassment mixed with hygiene, no one at the exhibition is actually wearing their mask, but holding it up to speak into it.)

The rather heavy-handed satire at work here, I suppose, is meant to compensate for the shortcomings of the game itself, which isn’t very good. But how does that affect Waco Resurrection’s status as a work of independent game art? “The game commemorates the tenth anniversary of the siege at a unique cultural moment in which holy war has become embedded in official government policy,” the makers tell us. “In 2003, the spirit of Koresh has become a paradoxical embodiment of the current political landscape – he is both the besieged religious other and the logical extension of the neo-conservative millennial vision.” Well, okay. But here the conceptual didacticism seems to have elbowed out the idea of enjoyment.

That paradigm is taken to its extreme in the Election Manifesto Random Policy Generator, running on a flat-panel iMac upstairs. “We pledge to disband unpopular independence”; “Identify private decision-making”; “Endorse productivity? Invest in productivity!”. Such slogans appear in red capitals on a black background. That is all. There is nothing to interact with. “Political rhetoric is not about communicating information, but is purely for communicating the impression that information has been exchanged,” says the blurb. Which is true – and, as with a lot of contemporary conceptual art, it is all you need to know. The actual art object adds nothing.

On the other hand, the most minimalist work on display here is also one of the prettiest. For Super Mario Clouds, Cory Arcangel hacked a real Super Mario Bros cartridge, reprogramming and soldering a flash ROM in place, in order to remove everything from the game except the blue sky and little fluffy clouds, which now scroll by ethereally on the wall. What does it mean? What is it saying? Perhaps it is just refreshing that it is not trying to force any meaning down our throats, beyond an implicit argument about the necessity for a high level of technical competence in order to be creative in this arena.

To me, though, the most boisterously entertaining example of “critical games” was the first thing I saw on entering the exhibition: a large projection of gib-soaked ultraviolence in the shape of an everlasting Quake III deathmatch occurring in one large box-shaped room. A cheesy-voiced American CNN-style announcer spews a kind of free-verse loop of soundbite phrases – “police conspiracy / hostage siege / desperation despair / ethnic war” – over an irresistible grungy guitar riff. Meanwhile the notifications of frags at the top left of the screen reveal that each character in the rocketfest has been christened with mischievous intent. “Dick Cheney almost dodged Ralph Nader’s rocket”; “Grand Ayatollah Fadlallah was gunned down by Condoleeza Rice”. It’s called Diplomatic Arena, and is done by Belgian/Canadian collective Workspace Unlimited, who are also building a large-scale networked virtual gallery space called Virtual World of Art, within which works like Diplomatic Arena can be explored.

I left the exhibition wondering about the relationship of critical games to the mainstream of commercial videogame development. The satire of something like Diplomatic Arena or Waco Resurrection may be crude, broad-brush stuff compared with what is done in other media (such as, for example, the superb Get Your War On online comic strip). And yet, compared with what explicit political or social content you might find in most commercial videogames, it is shockingly powerful and as sophisticated as the most fine-grained Chomskyan analysis.

Sure, a lot of time in videogames we want pure fantasy, pure escape. But a more sophisticated means of dealing with our real world might also be interesting. As the erudite curator of the exhibition, Edward Carels, points out: “Time and again we are struck by how [videogames] shy away from the real world.” On the one hand, it should be recognised that these “critical games” just fail to offer as rich or interesting a playing experience as the industrial product they arrogantly affect to despise. On the other hand, they do make a powerful argument for commercial designers entering into a closer engagement with contemporary reality.