In film, the effect is achieved by a set of still cameras surrounding the subject which are activated simultaneously. The pictures in the still cameras are then displayed consecutively and spliced into movie frames.
The first example of bullet-time can be found in the obscure 1981 action film Kill and Kill Again. It was also later used in a commercial by the Gap and popularized by the film The Matrix. Bullet-time is also used in computer games such as Max Payne and Enter the Matrix where it allows the player to slow the game world down, but still allows the ability to look and aim at normal speed.
A similar phrase, "Bullet Time", is a registered trademark.