Since this is a new topic, I've moved it to its own post.
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If I look at the video with the camera connected to the TV, the picture is smooth and nice.
However, after trying to edit the video in Premiere CS4, I have problems with the quality. I can get good picture quality but the movements are much more "jerky" than when I view it from the camera.
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That sounds like either a framerate change, or a drop-field deinterlace. I'd look to the framerate first. What fps is the camera shooting? And then does it match the project settings in Premiere? It's easy to make this mistake, even I've done it.
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Is it possible to edit and store in the same .mts file type?
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Not with Premiere, no. "MTS" or "M2TS" is an MPEG broadcast transport stream wrapper, which is also used in quite a few cameras. I don't shoot a lot of video, so I don't recall all of the specific formats that can be held within the wrapper. Obviously MPEG-2 is there, but I believe MPEG-4 is also allowed, which opens the door for formats like H.264. You'd need
to do a Gspot or Mediainfo on the file, to learn what the source really is.
Premiere can output quite a few formats, but given that it's being decoded/re-encoded, I don't much see the point in putting it back to a .mts file. You could just as easily encode it to a more standardized MPEG-2 in an .mpg file (used for DVD). Or even output as H.264 in an MP4 file (used for Blu-ray or streaming videos).
If you're just removing unwanted footage, and don't want to re-encode the video, there are other editors like
Womble and VideoReDo that you may want to try. Those would run about $100, so it depends on what you want to spend. For adding any sort of effects, or doing anything aside from cutting out unwanted footage, Premiere is one of the best tools for editing video.
Adobe Premiere Elements or Adobe Premiere Pro?
And which version number?