... well, not a
mygreatmovie.imovieproject file .. 😉
but iM is concepted to deliver to DVD or tape.. and as long these festivals accept miniDV (which is a consumer standard!), why not? I've read a post here a while ago, someone needed her project to VHS for a festival (??? a festival from VHS???)
as Matthew said above: the limitation is the quality of your camera - ok, 3ccd delivers in a very good quality, even broadcasters dare to use such material... anyone said "Blairwitch Project"? 😉 many documentarists like to work with small consumer cameras, easy to handle, you get miniDV tapes anwhere, cheap...
you can "telecine" video to film - which shows fast the limitations of video, esp. consumer cameras...
and the new HiDef consumer cameras make it possible to work in very high standards... George Lucas (Scorsese??) said a while ago, he's afraid of new "companies", doing movies from the literarly garage ...
it is not the material, it is the story which makes a movie great (says someone, who LOVES all these popcorn Marvel/Starwars/sfx movies... )
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in addition:
when the first documentarists started to use handy 16mm cameras instead of bulky 35/Cinemascope/70mm todd-a-o material, we had the same discussion.. 😉