This is a question I was asked by email, actually it's a rather good question as for a long time as a cameraman, I wasn't sure exactly what it was and how it worked. I did know (from reading the manual) that DCC was a supposedly magic way to get better highlight handling, so I did tend, in the past, to have it switched on most of the time. These days however, DCC is something that I tend not to use.
So what is DCC? well DCC is basically an automatic knee function. Going back to basics, we have to consider that standard camera gammas have a very limited dynamic range, typically 6 to 7 stops. This is mainly for historical reasons to ensure that grandma with her 20 year old TV, which may only have a dynamic range of 5 or 6 stops still gets a sensible picture, even if shot with the latest and greatest technology. However, most modern cameras are capable of capturing a much greater dynamic range than 6 stops. Fortunately the human visual system is tuned to analyse the mid ranges (faces, plants etc) in far more detail than highlights. This means that we can compress highlights and most viewers won't notice, and that's exactly what the knee circuit in a camera does. It takes anything above a certain brightness level (the knee point) and compresses it. As an example if we consider that our standard gammas allows us to have a 7 stop range, then if we take everything brighter than stop 6 and compress it by 3:1 that gives us a 9 stop range squeezed into a 7 stop recording and the average viewer probably won't notice the compression. As a camera operator your life is much easier because the sky doesn't blow out and over expose quite so easily.
So most pro cameras will have a knee circuit operating at a fixed point that helps us deal with highlights. That's great and very useful, but it is introducing compression and there is a fixed point at which the compassion starts. This makes the compression quite ugly due to it's "on" or "off" nature (look at hypergammas or cinegammas for something in between). A typical example of ugly knee compression would be a face where the cheeks or forehead are shiny and quite bright, as a result the knee kicks in on these areas and gives them a very plastic and un-natural look.
This is where DCC is supposed to come in. It stands for Dynamic Contrast Control, which sounds very fancy indeed. In reality it is nothing more than an automatic knee. With a conventional knee, the knee point (onset of compression) and knee slope (amount of compression) are fixed. But with DCC the knee point and knee slope adjusts automatically depending on how bright the highlights are. That's great if your lighting is constant and the scene doesn't change as the knee will adjust for optimum contrast handling, but not so clever if the highlights start changing mid shot. For example if you have DCC on and you pan across a bright window you may see the brightness of the window go up and down as you pan past. You may also see clouds or the sky changing in apparent brightness as the sun comes in and out, while the rest of the scene remains constant. Another way of thinking about auto knee or DCC is as automatic gain just for highlights.
I would never normally use auto gain for the rest of my image, so why have auto gain just for the highlights. It looks really nasty when you see it operating and in very bright scenes can make judging exposure harder as you may be fighting the auto knee. Open the iris, knee compresses more, close the iris, knee compresses less and so on. So these days I choose not to use DCC, instead I have a couple of different picture profiles with different fixed knee settings for different lighting situations. Or I use cinegammas, hypergammas or S-log. Cinegammas and hypergammas have much more pleasing highlight handling than conventional gammas + knee, but you may need to add a little black press to restore some contrast if your not going to grade (negative black gamma).
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