Most action video games begin with an explosion. Half-Life begins with a commute. A monorail carriage slowly transports everyman scientist Gordon Freeman to his new job at a remote science facility, Black Mesa. In the background, a computerised female voice issues safety information, while through the windows we see tableaux of life at the institution: weird robotic machines, bespectacled scientists, a security guard desperately banging on a sealed door. It was the first hint that this new game from fledgling Seattle-based developer Valve was going to be something interesting and unusual.

The brilliance of Half-Life begins with its immersive storytelling. The opening accustoms us to the Black Mesa research facility, tells us a little about Freeman’s role and sets up the narrative universe – all without leaving his perspective. As you enter the facility, fellow scientists chat to Freeman about a forthcoming experiment, voicing concerns and discussing trivial details. You can stand and listen or just wander off. In this way, Half-Life is naturalistic, which was a revelation in 1998. The lack of cinematic cutaway scenes showed great faith in the world and the player, and deepened your relationship with the environment and the protagonist. The message is simple: you’re trapped here too.

The lab experiment turns out to be a disaster beyond imagining: it opens up a fateful rift in space-time, unleashing the massive explosion you’ve been waiting for. Freeman regains consciousness to find the lab both collapsing and full of hideous HR Giger-esque alien monsters. From then on, your job is to get him out of there alive.

The game progresses not as a power fantasy, but a survival story. Freeman, weak and disorientated, must grab whatever he can to survive and the game’s first and most iconic weapon, a crowbar, symbolises your role as a worker rather than a soldier. From here, you stagger through a series of sequences that work like disaster-movie scenes: pockets of survivors – gravely injured scientists, desperate security guards – drip-feed you information, drawing you further into the plot. Meanwhile, the monsters scuttle about unseen: you hear them in the ducts and behind locked doors; you see the eviscerated bodies of your workmates. As in Ridley Scott’s Alien, Half-Life allows the creatures to fester in your imagination, ramping up your dread before they are unleashed.

Half-Life wants you to know that other things are happening in the world. You’re not the space marine hero at the centre of events – this isn’t Doom – you’re trapped in a much wider nightmare. Throughout the game, you stray into scenes you can’t control: you see monsters grabbing scientists, you see guards fighting gigantic beasts. It’s a world where horror keeps unfolding beyond your control, again giving you the sense of a real disaster.

But brilliantly, like Valve’s other masterpiece, Portal, Half-Life is also a game about artifice. Black Mesa, with its sterile high-tech labs and futuristic living areas, is a theatre set: behind the stainless steel panels and flatscreen wall displays is an intestinal labyrinth of work tunnels, ceiling cavities and air ducts, patched with rust and grime and dripping in goo. As you progress through the game, you travel deeper into these nightmarish no-go zones, like an urban explorer traversing the sewers beneath a glittering city. Black Mesa offers the pretence of scientific order, but it’s all a cover-up. Scratch the surface and it’s gore, chaos and terror.

The game’s most terrifying enemies are the headcrabs, Valve’s answer to Alien’s facehuggers. They attach to the victim, swallow their heads and take over their bodies – the person is still in there somewhere, screaming. It’s such a horrendous concept it fits perfectly with the game’s themes of corporate control and professional culpability.

Then there’s the game’s real antagonist: the creepy man in the smart suit who follows you, appearing in neighbouring rooms, on walkways in the far distance, staring. Like the Cigarette Smoking Man in the X-Files, he represents the secret cabal, the illuminati, the shadow government – he is the fear that there are powerful rich white guys controlling all the horrors of the world. The choice he offers to Freeman at the close of the game is the archetypal Orwellian quandary: sell out or die.

It’s only the now-simple visuals that tell you Half-Life is 20 years old. Its storytelling is so clever, subtle and perfectly pitched, it can still engross you. Half-Life taught a whole generation of big-budget game developers how to tell stories in an interactive space without continually wresting control from the player. Followed by a variety of sequels and add-ons, expanding the story and exploring new perspectives, it was also a lesson in universe building. No wonder that more than a decade since the last instalment, Half-Life 2: Episode Two, fans are still yearning for another sequel.

Everybody who plays Half-Life has a favourite memory, a cherished moment, and they all feel personal. While other sci-fi horror games were telling us that monsters and demons were the baddies, Half-Life said: No, that’s what they want you to think. Tear down the scenery; look behind the lie. The real truth – the real horror – is closer to home, and it’s been watching the whole time.