A few different factors must be considered when capturing video from a VHS source. I'm no expert in digital video, but I've been through the painfull process of chosing a resolution for my captures, and I'll share my experience so you won't waste all the time I did capturing and compressing over and over.
Be aware that you MUST have the rights to make a copy of any copyrighted material, such as movies or video clips. If you own the copyrights, go ahead. If you don't, proceed at your own risk. Talking about risks, I will take no responsability about the procedures described in this document. This is provided just a a guide to help you with your captures. Any damages caused to your system by the procedures suggested bellow will be your problem, not mine.
THE VHS RESOLUTION:
If you search through the internet looking for information on the VHS resolution, you will find basically 352x240 at 29.967fps (Frames Per Second) for NTSC and 352x288 at 25fps for PAL-M. Yeah, right. You capture with that resolution and you get a video that looks like shit. So all those documents were wrong? No, they were inaccurate, or maybe just incomplete. The VHS video works with the interlaced system (not progressive), which means it draws every frame twice on the screen. In fact, every frame of an interlaced video is divided in two fields (the reason for this is a long story that comes from the first TV sets. You can find more information about this in the articles session of www.divx-digest.com). Those two fields mean that every frame carries much more than just 240 or 288 lines of information. If you capture at 352x240 or 352x288 you'll be skipping every second field, which results in only half of the resolution.
THE COMPRESSION ARTIFACTS:
Another interesting point is the compression you use. Compression algorithms (ie: Divx ;-) or intel indeo or ATI's VCR1 and VCR2, etc.) break the video color information into 16x16 pixel blocks. The smaller the resolution you use, the bigger the aparent size of those blocks will be. So, even if your video source has a very low resolution, you should capture it with at least 320x240, or the results will look weird. Also, if you are going to recompress that video later, or if you intend to edit it, try to capture with the least compression you can. If you have enough free space and you HD can keep up with high transfer rates, use uncompressed formats. When capturing a movie that has subtitles or any small text with the standard 352x240 resolution, you'll get those little "ghosts" all arround the text when you compress it to a higher compression system, such as Divx ;-). Just like a jpg picture with high compression. The same effect (defect) will show up arround hard edges.
There's also a great difference between videos captured from a VHS source and the ones ripped from DVDs: the noise. If you compress a DVD ripped video at 352x240 with divx, you get a good result, because the source video didn't have any noise. On the other hand, if you compress a VHS source video at the same resolution, the noise will seem to be amplified, and will take a lot of the stream bandwidth.
THE SUGGESTED SOLUTION:
If you want your capture to look just like the VHS source (unfortunately it can't look any better), capture at 640x480 at 29.967fps, and then DEINTERLACE it. You can do that with softwares like Adobe Premiere or VirtualDub (this one is highly recommended - get it at the software session of www.divx-digest.com). However, that resolution demands a lot of processing power and free disk space. Some experts would say that such a high resolution for a VHS source is a waste of time and space, but I insist: if you like things perfect, try that resolution. Now, if you don't need such perfection, or your system can't keep that up, use 512x384 at 29.967 and the result will look quite as good as 640x480. I have an ATI ALL IN WONDER PRO with 8Mb in a K6 2 400 MHz with 128 Mb RAM and this resolution works just fine with the ATI VCR2 codec. At last, if you are out of disk space, or running on a slow system, or even if you want to make a VCD compliant video stream (which MUST be 352x240 at 29.967fps), capture at 352x480 at 29.967fps (this way you get both fields), and then resise it to 352x240 using VirtualDub with the "precise bicubic" filter on. This procedure is also discribed at the Divx-Digest home-page.
The capture resolution will depend on the final quality or purpose you need. Capturing at the standard VHS resolution will skip every second field of the video, resulting in quality loss, since the interlaced system draws "half frames" at 60 Hz, and not actually full frames at 30 Hz. Capturing at a resolution of 512x384 at 29.967fps will get both fields, give a good result and won't demand too much system power. When capturing from a VHS source with higher resolutions (ie.: 512x384), it's recommended to deinterlace the captured video afterwards to save space and improve quality.
-If your capture card can't capture in resolutions like 352x480 or 512x384, use VirtualDub to do it by choosing the option "set custom format" under the "video" menu.
-If your using the ATI VCR2 codec (only ATI boards users), you may experience some system lockups when recompressing the video or even when seeking through it. ATI can't explain it, and they suggest you to update you ATI video player to it's newest version, but it didn't seem to work for me. The solution I found was to "downdate" my ATI video player to version 530005 (I was using 5350002 before). I really can't tell the difference among the 5xxxxx versions. All I can say is that the newer versions have more bugs.
-If you are capturing a long movie, you'll be facing the 2Gb limit for AVI files (yeah, when Microsoft created AVI, they thought that 2Gb would be more than enough). Even if you can save your files to AVI 2.0 (which breaks that barrier), you'll still face the Windows 95/98 4Gb file size limit. To solve that problem you can either use Windows NT or just capture with VirtualDub (as I said before, it's highly recommended). VirtualDub can split the video file in 2Gb or smaller files in real time while capturing. It reads those files as if they were only one big file as well.
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All I can tell you is in this document, so please don't send me any questions or troubleshooting problems.