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I think I'm going to adopt a new workflow where I go through original footage, setting in & out points and moving clips onto the timeline, then using Project Manager to "consolidate and transcode" individual clips. That way I have my select clips in a codec that's easier to work with than h264, and it's easier to find and re-use these select clips in future video compilations.
My question is, should I use GoPro Cineform RGB 12-bit with alpha or should I use DNxHR? I want minimal quality loss ... I notice that DNxHR files are about 4x larger than GoPro Cineform.
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Quicktime ProRes, GoPro Cineform, and DNxHD/HR are all good intermediate codecs and they are all good for editing. Each suite of codecs will have different bitrate levels and they should each offer comparable options.
Here's a handy chart: https://blog.frame.io/2017/02/13/50-intermediate-codecs-compared/
I personally use ProRes the most, but I also use DNxHD/HR from time to time. The problem with the consolidate and transcode presets is that it doesn't really tell you which "flavor" of these codec suites you're getting. ProRes offers 422 and LT, so that actually tells you something, but I don't know what the DNx option is actually giving you. I personally never use GoPro Cineform (not because it's bad). At a glance I'd say that chances are you don't need 12-bit media with an alpha channel (transparency), and honestly I'm surprised that that option isn't even bigger than the DNx one. Including an alpha channel typically results in a pretty large file size (if that's what it means by alpha).
I think you could also create your own preset with Adobe Media Encoder and use that to really dial things in.
And just to offer another option, you can select all the media in your timeline and choose Render and Replace. You'll get a similar dialogue that asks you what format/codec you want and you can choose to export the media with effects burned in, and get the option to create handles. I think it would work similarly for you in this situation, if not even better.
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