Of course, this is just little experiment, not for real usage. Watching movies with 16 colors and low resolution,  is not exactly what we want in 2007.
8MHz CPU is simple not capable for decoding video of some bigger resolution at decent framerate. But we can achieve smooth motion of 25 frames/sec (PAL) with prepared frames, and just reading them in sequence into video RAM from hard disk with basic sync. by calling V-Blank wait.
  I processed couple clips from well known movies. Most important is to reduce color number to 16, with custom palette. So, every frame has own palette, what gives best colors. Decreasing color depth was performed with Optimized Median Cut, Error Diffusion & Reduce color bleeding. By cartoons without error diffusion. For mono mode Ordered dithering is the best.

24 second clip (8MB)     ? 20 sec  (3MB)      24 sec (5MB)

Scanner Darkly trailer part  - 34 sec (8.7MB)   Mono mode (2.1MB)

  All files are with audio, but audio works only on STE machines.
In archives is couple short proggy for playback, of course in low resolution. Runs fine in Steem and Hatari, with mapped directory as hard drive.
Use LAVPx.PRG on STE and LVPx.PRG on ST - where will be no sound.
Animated GIFs are made with great freeware program Movies .
Best looking are cartoons, and are best comprimable. Reason is that there dithering was not used because of limited color number.
All processing is made with freeware programs: Virtual Dub for resizing, cropping, converting to RGB, triming. Avisynth for writing
image files from frames. Image Magick for converting to 16 color indexed bitmaps - what is most important operation which quality
mostly affects how it will look. Then 16 color bitmaps are converted to Atari ST raw display format with palette for each frame, all in single file for faster access.

New playback program: Universal - for all combinations: With or without DMA sound, for playback from hard disk, SCSI CD (Filesystem) or from IDE CD (Master or Slave) .

 Keys during playback:  CTRL - back 10 secs     ALT - forward 10 secs    Right Shift - abort play & select other    Left Shift - deinterlace
Right Mouse - progressbar on/off    Left Mouse - jump to pos - click on progressbar
    Short AVI clip to see on PC how it looks:  Demo (2.3MB)


  Playback from CD or DVD:
It is possible to put aprox. 90 minutes of such audio-video on DVD (4.7GB) or aprox 14 minutes on CD (700MB). Reading speed with IDE interface ( astide.php ) is more than enough for smooth playback:

Test program is here:  astide.php

Clip with playback software from CD/DVD: MITME (12MB)
Before burning to CD/DVD LAV file must be byte-swapped. It can be done with program Drive Imaging: http://www.ppest.org/zx/drimus.php
Open file with 'Open image file', check 'Swap L/H' and click 'Read from drive' . Give filename and save it...

Not simple, as usual... Standard CD and DVD formats (ISO 9660) have reversed byte order (Intel). Software for reading CDs on Atari swaps them to get correct order, but it slowdowns read much. Solution may be twisted cable ( idepc.htm ), or swapping bytes before write files to DVD/CD (in ISO image or files themself). In both cases special driver or reader is required.

PP  Jan-Mar.  2007.