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Magicka was released on January 25th, 2011 by indie developer Arrowhead Studios, a studio made up of six swedish university students. It was their first game, and it's managed to sell over 200,000 copies in its first 17 days on sale.
The game is a tounge in cheek "action-adventure" in which you play one of up to four wizards, equipped with a staff and sword, who run around creating spells and mayhem.
You have 8 different elements which you can combine to make literally thousands of spells: Water, Fire, Lighting, Earth, Cold, Shield, Arcane & Life. The elements interact in a very logical way: water and cold make ice, fire melts ice & dries water, lightning is conducted by water but grounded by earth, so you can't combine the two in any spell. Earth is a projectile, life & arcane are beams and fire by itself is just a spray, but combine earth with fire and you get a fireball, where as if you combine it with arcane you get a sweet fire beam.

There are four ways to cast each spell:
On top of the regular combinations you have a bunch of special spells ("Magicks") like teleport, invisibility and summon the dead, which do things the mere combination of elements alone wouldn't be able to. You still conjure these spells using elements, you just press the space button to cast them instead.
There are two gameplay modes right now: Adventure, which takes you through a quirky, entertaining storyline and Challenge, where you face increasingly difficult waves of enemies in an arena. Both modes can be played either by yourself, with four players locally on one computer (using gamepads for three of the players, and keyboard/mouse for one) or through the internet. A pvp mode hasn't been released yet but has been promised for a future patch, at no extra cost.

Apart from it's unique spell casting system, another charming aspect of the game is it's geek pop references and humor, which you'll find these peppered liberally in Adventure mode, in the dialogue and in game items like the "Knife of Counter Striking" which of course makes you run faster.
One of the best parts about Magicka is that it's available on Steam for a mere $10 USD which is a steal for just the game itself, not to mention the intense developer support, with new patches at least weekly so far. The initial release of the game was a little raw but during the first few weeks there were daily patches and it's grown to be a stable, polished game for the most part - I haven't had any of the crashes or multiplayer problems that were reported upon release.
I'm playing the heck outta this thing, having racked up 48 hours playtime so far, and unlocked all of the Steam achievements. I'm always looking for players with a low ping to play with, both in Challenge and Adventure mode, so if you play add me on steam, my username is Copper_Blimp. I'll show you a spell or two :)
If that weren't enough, a spin off game has already been announced in the same satirical vein:

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