I have been spending the better part of 2 days trying to figure this out. So far I have learned that Quicktime (through iMovie) is displaying a gamma shift in the rendered video and that the actual file is okay, it is quicktime that is messing it up. This also goes for anything that uses quicktime, like safari, itunes, imovie and similar players/ editors that use the Core Video hardware acceleration. Computers or Players that don't use hardware acceleration will show the same file correctly when played. But of course this is still an issue for anyone viewing your video on another computer with hardware acceleration enabled. To them your video will look faded.
It happens far worse on windows machines where the gamma is set to 2.2 (my mac was set to 2.2 until I found this nasty H.264 bug in quicktime rendering.) In the 2.2 gamma environment the shift in brightness is very pronounced. In the 1.8 mac gamma environment, it is less pronounced but still problematic enough that many of the studios that I know won't use Quicktime or the H.264 codec until this bug is corrected.
This problem is documented all over the web and it has caused major headaches for a lot of people for somewhere around 3 years. So far Apple hasn't done anything to fix it (or can't fix it) even though it is a persistent problem, especially for people who calibrate their monitors or people on PC's.
It's really frustrating and after hours of scouring the net for an acceptable solution, I still haven't found anything that doesn't involve simply not using quicktime or h.264. Here is one (partial) solution I found:
This tip from Mitch Gates:
As you may have noticed, the current implementation of the H.264 compressor for Quicktime has the nasty side-effect of raising the gamma or black levels of the resulting movie file. In order to fix this you must have Quicktime Pro (otherwise the fix will not hold since you can't save the updated .mov). Here are the steps?
Open the QT
Go to "Window/Show Movie Properties"
Select "Video Track", then click the "Visual Settings" tab
At the bottom left, change the transparency to "Blend" then move the slider to 100
Change the transparency to "Straight Alpha"
Close the Movie Properties window, then play or scrub the QT. Your black levels should now look correct
Save over old .mov
This is for PC's. On the mac you change the transparency to "composition."
The problem with this solution however is that doing this disables the settings that allow fast playback (playing the movie before it is completely downloaded.) Another issue with this solution is that, while it fixes the look of the video in Quicktime, VLC player still exhibits the 'washed out' look on the same file. Finally, this "solution" isn't actually a solution at all.
An interesting thing about this is that the video file itself is not really washed out as far as I can tell. There are a few things that point to this. One, exporting the h.264 file and changing the codec to "Animation" or "None" corrects the gamma shift and returns the colors to where they should be, but this increases file size dramatically. Second, I noticed that when I select the h.264 file and choose "get info" the preview thumbnail shows the poster frame with correct colors. Third, when I put the h.264 file online Safari shows it all washed out but FireFox shows it correctly. Strange...
At this point I think the only viable solution is to do this:
MacInTouch Reader
I too have been plagued by this H264 problem for the past 2 years it seems.
I have a suspicion that if we polled the users experiencing this effect that it would result they all use custom or modified Display Profiles in the Display System Preferences.
My temporary (and somewhat silly workaround) has been to change my display profile to the standard "Cinema HD Display" instead of my user-created "Cinema HD Display Calibrated" profile.
It does alter the gamma of my display to a unpleasing value, but after changing it, the H264 export works beautifully. No gamma shift at all.
I have read all the suggestions on trying the quicktime "filter then colorsync" export and always got unsatisfactory results. My silly workaround always produces the best results. I just have to change the dang setting back after I export so my eye don't burn out of my skull.
So it all comes down to a gamma shift on the part of Quicktime's render of H.264. You would think that after so many years of this issue going on Apple would have fixed it since they have documented that they know of the problem. A little baffling.
If you want to research this further, as I will continue to, just type "h.264 gamma" into google and you will find a ton of fellow frustrated users trying to figure this out. Most just switch to Sorenson 3 it seems or "un-calibrate" their displays when doing the render export. None of this is perfect unfortunately and I find myself using "Animation" even though the file size is insanely huge. It is better that having upset clients telling me that the video is washed out.