The moving background graphics provide the illusion of an isometric 3D view, but the action is in 2D and plays like a fixed shooter.

The game takes place in a U-shaped playfield known as the "Space Channel"[1] representing a trench inspired by the Death Star.

When an enemy is hit, it turns into a broken ship that then tumbles down the screen towards the player, bouncing off the trench walls.

Periodically a target appears, like the Death Star's thermal exhaust port, giving a bonus score if the user hits it within the five seconds it remains on screen.

[1] Space Encounters is based on a common Intel 8080-based chassis that had been used by Midway all the way from 1975 when they introduced Gun Fight.

[8] All future Midway games would use color capable hardware, often the Zilog Z80-based chassis licensed from Namco and used in the US releases of Rally-X and Pac-Man.