I love my Canon mark 2 and gopro camera but it's absolutely terrible as a quadcopter camera.
The vibrations coupled with the CMOS sensor wrecks the whole image beyond repair.
Nearly all of today's cameras are made with CMOS sensors rather than the classical CCD sensor because CMOS offers better image quality and at lower power consumption... But there's a heavy cost that comes with this.
Rolling shutter.
Even with my stabilization software i can't really correct rolling shutter because the original image is distorted in the first place, thus yielding me warped stabilization that looks like an acid trip rather than beautiful aerial imagery.
CCD sensors do not have the rolling shutter because the image production process is completely different and the below video is a clear demonstration of the difference.

Austin, I've deleted my last post to not confuses anyone. But I'll keep my opinion about the Arri Alexa which is a shame side-by-side with other of the same class. It is a perfect example of a wild, savage, jumpy and poorly trained CMOS sensor. (LOL) It produces washed images which need lots of post-production for color correction (which don't fixes the blurring of the bad noise filtering). Here is what I'm talking about:
Comment by steve F11music.com on August 3, 2012 at 6:09pm What is the model camera you are referring to? I'm not finding it in your post but one of the pictures is not loading.
Comment by Jack Crossfire on August 3, 2012 at 7:27pm A CMOS could have no rolling shutter by having 1080 ADC's & a lot of onboard memory. It would still be cheaper than making a CCD, but more expensive than an iphone camera until transistors get a lot smaller. As in all things, consumers just don't care about rolling shutter. Reviewers don't cover it. It's something they just accept, like unemployment & taxes. As long as it's fast enough & there's no breakthrough in ADC design or memory, there won't be enough demand to do it until a few more semiconductor evolutions.
It's great to see this blog post because I've been looking a lot at the camera mount code and have recently attached a GoPro to my quad and I'm not getting anything like the beautiful pictures you've shown.
So the Lumix a little more expensive than the goPro according to eBay but perhaps worth it. Certainly it's small so you could use a much smaller camera mount. One nice thing about the GoPro is it does come with all kinds of mounts which make it easy to just stick it to your quad (i.e. if you don't have a stabilizing mount).
Comment by Rory Paul on August 4, 2012 at 6:54am Austin
How is this camera triggered and does it have accesable AV out?
Comment by Austin Chapman on August 4, 2012 at 7:47am 
Hi guys, the camera is a Panasonic Lumix TS4 it doesnt seem to have AV out but it does seem to have an intervalometer mode (like the gorpo) where it can take a picture every so many seconds.

It has AV out but not while recording like Austin said in the post.
Comment by Jonathan M on August 4, 2012 at 11:40pm I have been doing a lot of research lately on AP/AV flying and this is what I have come up with:
1) Kill the vibes at the source: Balance your props and motors. This can do wonders
2) Isolate the camera mount with soft mounts (used in compression generally). Cinestar has a pretty slick setup (expensive), but there are a lot of other successful designs out there as well. Wire isolators, same dampers used in compression and matched for the load, grommet styles.. lots of designs.
3) Isolate motors mounts from arms. This point is a hotly contested one since it could allow your motors to move in response to aggressive maneuvers. Most people have had success with these, but if you do steps one and two correctly you will probably not need this. I have some AGL hobbies isolated mounts that i will be trying out soon.
I have seen plenty of videos from different CMOS type cameras with no noticeable vibration effects using those methods. The main issue is getting smooth stabilized video which comes from the type of gimbal, servo speed/type, gear reduction and outputs from the gimbal or flight controller. Smooth flying also comes into play.
Also, a real popular camera being used successfully by the "pros" is the Sony CX760 and it's derivatives. It has a cool lens stabilization technique that is doing wonders for smooth videos. There are plenty of examples out there.
Just my 2 cents :) Your video looks great too!
Comment by Michael Naumov on August 5, 2012 at 1:16am @quadrocopter: Wow! Thank you very much for info on how to activate live video out on Lumix cams!
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