Things to discuss:

-Will the observer mode have a camera to record in-game events. It could be a thing where you click a button and it records from there on in or it could be a last five minutes sort of thing. By this I mean in observer mode it is constantly recording but only five minutes is ever saved. You could then access this and render clips and stuff.

-Will observer mode be compatible with sandbox mode. I am thinking of this in terms of machinima making as the combination of the two is perfect. Thoughts?

Yeah observer mode will have a record button, But I think if we limit it it needs to be a higher limit.
You could go into observer mode in sandbox, yes.

Five minutes of play saved does not necessarily even equate to five minutes of machinima. The limit will have to be higher - and we can probably just handle it with keystroke commands. (C&V, or something like that)
Still capabilities might be nice too.
We can work out someplace acessable where said stills/footage would be stored, because even if we have no storage limit, we want people to be able to remove and edit what they've got.

For time limits, I'd say at least twenty minutes should be allowed. Any less than that would be extremely aggrivating.
-Waap.

I like the idea of being able to save the last x minutes, if something really cool happens (like those ideas we had for easter egg events (where'd that thread go?)), then I want to be able to save it.

But twenty minutes? Hm... What if I wanted to record one of those events, which happened in the last 10 seconds? I get another twenty minutes of boring? Maybe we should have a thing in options for how much history is recorded, as well as an easy-to-use in-game video trimmer, so you don't have to launch another program to trim it.

And observer mode should be accessible in Sandbox. In fact, when you go into it, that should be the first mode you're in. I can't see you making your first star in organism or strategy...

What wouldthe movie file be saved as? Avi, mp4?

Doesn't really matter at this point.

Video length should be really limited by filesize, like how most video software does it.

Actually if you just want to record what you are seeing in your screen you can alredy use any of the multiple screen recording software that there is out there, like fraps. It might help with performance but the user would need to add any voice comentary over that, so even if we help with the recording most people would still use fraps. I would think of this being something quite los priority.

Another idea i had while reading this thread yould be recording what it is happening instead of what you are seeing, something like replays from RTS or MOBA. That way when rewatching you could see everything from any camera angle. I would actually add this to normal gameplay too.

Throughts?

Well, i just said that designing and creating a whole recording capability when youtubers would still use their own software is pointless.