Files smaller than 1024x768 will work. However, when you scale them up to fill the image area, they will get pixelated especially if you're coming from 480x270. Those are really small. And you definitely don't want to collage files that small...they will get VERY pixellated.
If you're doing a 4x1 collage, you'll want media that is 1904x416 (if using single media). You can also use larger media and use the "segmented" collage if you want to do the prep work and segment it yourself before uploading.
I recommend taking a look at these 2 places for content creation:
www.highend.com/support/digital_lighting/dl2supportguide/Collage-generator/dl2-HD-Content-creation.asp - for collage content
www.highend.com/support/digital_lighting/CreatingCustomContent.asp - for general content.
The fixtures come with a TON of stock content already loaded. Take a look at the files and see. You'd be surprised at what you can come up with and not make it look stock.
Is there particular footage you are looking for to match with what you have??
I'm doing a soft seat theatre tour, and am looking for a bunch of non animated content, ie.. time lapse blooming flower, marathon, nature, black and white... etc..
If you have the budget to purchase content, there are tons of places out there.
Here's a list that High End publishes: www.highend.com/products/digital_lighting/CustomContentProviders.asp
If you don't have the budget....you can always rent a camcorder and fix up the content yourself in After Effects, Premiere, iMovie...tons of places to tweak.
Find the content you like...you can always cut down the content, but it's harder to scale up.
I use EPISODE (as I'm a Mac guy) to do all of my encoding. That handles my cuts and sizing issues. I also use After Effects, Photoshop, Premiere, etc. for any editing, backgrounds, etc.
I haven't used it, but I found jahshaka.org/ as an open source After Effects alternative. Again, haven't used it myself.
