To get an idea of how movies in movies are useful we will create a simple car example.

Insert > new symbol

Name it wheel and choose Movie Clip type

This will take you into the symbol editor. Draw a simple wheel.

  While still in the symbol editor, right click on frame 1 of the wheel timeline and choose Create Motion Tween. Click OK to the message that comes up about creating a symbol.
Click anywhere on the tween on the timeline
Look over to the properties panel and find Rotation. Change it to 1
  Return to Scene 1

Drag 2 copies of the wheel symbol onto the left side of the stage.

If your wheel is too large, use the Free Transform Tool to resize it.

Use the paintbrush tool to draw a car to go with the wheels.

Press Ctrl-Enter to see the movie. You will notice that the wheels go round, but the car doesn't move yet!

Right click on frame 1 of the timeline. Choose Create Motion Tween.

Then click on the last frame of your tween so the playhead moves to it.

Drag your car so it is just disappearing off the other edge of the stage.

Press Ctrl-Enter to play your movie. You will notice that it is much too fast.

Sit your mouse on the end of the tween until it appears as a 2 headed arrow. Then click and drag out the length of the tween to about 100 frames.

Your car needs to start off the left hand side of the stage. Click on the left hand green dot from the car's path. Drag it off the left side of the stage.

Now press Ctrl-Enter to see your movie.

 

If you would like a background, click Add New Layer. Name it background and drag it down so that it sits below your Car layer.

Click on the first frame of the car layer and draw in a background.

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Create a movie of your own that has a movie in a movie. To get ideas think of an object that has something that repeats over and over. For example a dog with a wagging tail or flapping wings for a bird.