Spellbound was founded by Armin Gessert in 1994 who was one of the three developers of the game The Great Giana Sisters (first released for the C64 in 1987).

The Spellbound team initially produced graphics for the company Attic and thus took part in the creation of the role-playing game "Das schwarze Auge III" ("The Black Eye III"). This collaboration led to a commission from the company Fantasy Productions. They were to develop a game for the most successful series of German science fiction novels "Perry Rhodan" of Pabel publishing house. Spellbound’s first title was a strategy game called Perry Rhodan: Operation Eastside released in 1998 under the label Fantasy Productions.