Depending on the screen design, you may not always need a fullHD resolution for playback. If your setup consists of a large background image with a smaller video insert window, the video resolution of the insert window does not necessarily need to be fullHD resolution. Playing it back with an originally smaller size, will save you performance!
Resizing content to a smaller output resolution may lead to a worse image quality. Therefore it can be more effective if the content has been created for the desired image size.
It is recommended to work with high resolution files if you need the largest flexibility. If the flexibility is not required or if the performance limit is reached, it is better to decide which content must have a smaller resolution.
For a maximum of performance and image quality, the optimum case would be to have all video files in several resolutions. A standard case would be HD, SD and Video-CD format.
Even if your screen has a large dimension, this does not necessarily create the need for a high definition video projection. Creating content in 4k or HD is more expensive than SD and the decision should be taken upon the following considerations. Based on these criteria you should decide, in which resolution your content needs to be created.
How far or close will the audience get to the screen?
Is the nature of the projected image more graphical background animation or real film footage?
What kind of projection medium is used?
What kind of aspect ratio is intended?
What is the native resolution of the projector / display?
The last topic describes the display and content formats in general. The next one provides an output resolution table and explains in detail different content formats, such as audio, single images, image sequences and videos.