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In many places in the film, we see glimpses of Tycoon mode, Advanced Movie Maker, and the Post Production screen. These shots were achieved with the help of Fraps, a real-time video capture application. This program makes capturing video from games easy - just press a hotkey to start and stop the video capture! By default, Fraps uses F9 to initiate capture. As this is used by The Movies to quicksave your game, I switched the hotkey to the backslash character. As animated overlays run at 10 frames per second, I also set the frame rate in Fraps to 10.
I set The Movies to a resolution of 800x600, so that the resulting video was as close to the game's 768x432 resolution used when exporting in "Highest" quality. Each video I needed was processed in VirtualDUB, and cropped to include the portion of the screen I wanted. It was then exported as a sequence of TGA images, resized to 512x256. I then used the DDS Converter to convert these files into animated overlays. The high-resolution version used the 768x432 cropped videos directly.
Note that Open Broadcaster is also a good solution for capturing video game footage!
FRAPS and the settings I used. The video capture hotkey, record sound checkbox, and frame rate were all changed from their defaults.