He also played the computer game Grand Theft Auto, which sends the player's character on a violent crime spree.
A court in Hull, 250 km from London, heard Jim Callaghan downed a bottle of vodka before breaking into 65-year-old Irene Robertson's home and attacking her.
Prosecuting at the Crown Court, Guy Kearl QC said: 'In the early hours of December 28 last year, after consuming most of a bottle of vodka, the defendant went on a rampage of escalating violence with an axe and long-bladed knife as weapons.
He first confronted Rebecca Johnson, 20, and Danni Burham, 17, as they sat on a bench eating a takeaway.
Callaghan smashed the axe into the bench between them and pulled out his knife. He told them: 'I'll stab you and chop her head off.'
The terrified girls ran off, and Callaghan then went after Darren Morrow, 18, who ran but tripped and fell. Callaghan straddled him and swung the axe at his head.
'It hit him on the left side of the head just in front of his ear, stunning him and knocking him back to the ground,' said Mr Kearl. Mr Morrow managed to grab the axe, get to his feet and escape.
Next Callaghan threatened cyclist Jamie Netherton by waving the axe above his head. Mr Netherton fled and flagged down a passing police car.
However, by that time Callaghan had run off and forced his way into Irene's home. He did not know her. Simply he was consumed by his rage. He struck her six times on the head with the axe, chopped off a finger and repeatedly stabbed her in the back, stomach and leg, the court was told.
He did not stop there either but went on to attack Mushin Thejeel and his wife Sana Kadum, who lived next to Mrs Robertson.
He smashed a hole in their front door with his axe, thrust his arm inside and demanded alcohol. He also threatened to kill Mr Thejeel, grimly warning him he had already killed a woman.
'Mr Thejeel held the defendant and bay and his wife managed to call the police.
'The defendant threw the axe to the floor when the police came on the scene. He told them he had killed a woman and it was murder.'
Police discovered her body and a message written in lipstick on a bedroom mirror telling his mother he was 'sorry and hadn't meant to kill an old woman'.
After his arrest Callaghan was diagnosed as being a paranoid schizophrenic. He told psychiatrists that for several months he had been hearing voices in his head urging him to kill and had seen a man 'with horns on his head'. He said he began drinking heavily to cope with such visions.
A jobless youth, he had no previous convictions, but his friends said he would turn violent after taking alcohol. He had threatened his mother with a kitchen knife when he was barely six years old and had been referred to the community psychiatric nurse. But he was not under treatment at the time of the horrendous murder.
Defending, Eric Elliott QC said: 'This case is sad beyond words. The pain of Ms Roberton's family is unimaginable. The events that led to this are hardly credible, if it wasn't for the fact that the defendant was suffering from severe mental illness.'
Callaghan admitted manslaughter by reason of diminished responsibility and unlawful wounding at an earlier hearing after it was decided he was mentally fit to plead.
Judge Michael Mettyear gave him a Hospital Order and a Restriction Order meaning he will be treated at a high security hospital indefinitely.
Judge Mettyear added: 'This was extremely serious and surprisingly committed by someone with no previous convictions. You are very very ill mentally so it is inappropriate to pass a prison sentence.
'The public will understandably have a concern that you are not being given a prison sentence but prison will do you no good. This order will have the same effect as it will be a very long time, if ever, before you are suitable for release.'
Callaghan, now aged 18, wearing a crumpled white shirt, sat with his head bowed during the hearing, Daily Mail reported.