I am making a first-person computer game in the style of Carmen Sandiego or The Cluefinders. My game company is just starting up, so we have no spare money.
My animator and I decided that the best way to get movement throughout the game would be to create 640x480 videos that would serve as backdrops, and would hold everything from entering/exiting the scene to talking with other characters (especially since Flash and WPF don't play well with each other). Everything the user interacts with directly (by clicking or dragging) would be put over this video, and in cases of clicking "something in the video," we'll use empty image boxes as "hotspots".
Thus, bringing me to the question. What is the best video format to use so that we have good quality video at 640x480 res, yet does not take up too much space, as this will be running from disk. Whatever it is, it must be able to be integrated in WPF without WinHost, because I have to have WPF objects over it. And again, it must be a format I can use commercially without royalties, but also does not require me to pay for it (therefore, BINK Video is not an option).