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Avid Media Composer 5 is known for its advanced capabilities...and its many complexities. Here is a guide for setting your Avid MC5 (Windows version) up to import P2 video footage.
Project Settings
Set you FORMAT to 720p/23.976. Your aspect ratio should automatically set to 16:9.
Set your RASTER DIMENSIONS* to 960x720**. It will automatically tell you that it supports DVCPro HD.
Check FILM if you are importing film footage. Select the type of film that you have shot on.
*Raster: Width of individual pixels
**Note: For some reason or another, sometimes Avid will not let you change the raster dimensions for the project.