Recently I've been playing around with a pretty cool software package called Apple Motion. Follow that link and check out the intro video to see the kind of professional graphics it can produce. One really impressive trick that it can do is to stabilize shaky video. That's what we're going to be focusing on today. The way it works is that you set reference points on stationary objects in your video. Motion then steps frame by frame and uses image analysis to figure out how much the object under the reference point has moved or rotated from one frame to the next. Once it has calculated the delta vectors between each frame, it reverses them and moves the entire video by that amount to maintain the reference object at the same place on the screen. Then, you can crop your video and you've got a stabilized video.
The video I'll demo this with is pretty boring, but it's clearly hand-held, and it makes a good candidate for this because there is a large stationary object that nothing obscures throughout the entire video. I placed the reference points around the white frame through which the cars pass.
This was the "rally" start from the Antique Car Show last weekend.