Yes, it is perfectly possible. Do watch this YouTube Video
http://www.youtube.com/watch?v=WNPm3aKzPdg
Space Invaders – written entirely in the Bash shell, in a 248-line shell script.
The shell is often seen as old hat, hard to use, green screens and no interaction. In my new book, Shell Scripting (http://facebook.com/shellscript), I attempt to throw a new perspective on this; the shell can be used in lots of creative and imaginative ways.
The book also covers creating CSV files to easily plot complex data in spreadsheets, creating HTML as well as parsing HTML documents; I plan to post more updates before its launch on 12th August 2011.
Shell Scripting by Steve Parker. ISBN 1118024486
http://amzn.com/1118024486
http://facebook.com/shellscript
http://sgpit.com/book
You can get the code for the game here. The description and explanation is in the book, of course. But at least the code itself is available online for inspection.

Let it never be said that shell scripting isn’t functional. If you can make games you can do anything…right? Thanks for the link to the code
Great post.
Do you mind if I create a repo on github for space.sh? Thanks for posting the code.
thanks for code
I made a game in shell script too, maybe you would be interested. https://github.com/annacrombie/shell-tanks