As you mentioned, the quality of the movie capture has degraded seriously as screen resolutions have increased. In the Workstation 9 timeframe, the quality had become so bad that we didn't have a choice, but to remove it. We are exploring options to bring it back using a different technology, but this is more difficult than it looks. The movie capturing capability takes place in the virtualization layer and needs to be implemented such that it doesn't negatively impact the overall performance and scalability of VMware's hypervisor. We have attempted to make some improvements but they resulted in unaccepable consequences - specifically they were too processor intensive, so we are back to the drawing board. The good news is that we have some ideas!
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