The virtual studio is a form of video technology that makes it possible to combine physical objects with digital 3D objects in a virtual scene in real time. Instead of constructing prototypes in wood and other materials, the scene and prototype and props (if necessary) can be created by using digital 3D objects.

The virtual studio at CAVI is a blue screen studio with three blue walls, a blue floor and several objects in blue, eg. blue boxes in different sizes making it possible to build a flight of stairs. The position and movements of the camera being registered by a motion tracking system. This makes it possible to move the camera and make recordings in real time, with physical objects (people, for instance) being combined with a virtual 3D world. The virtual studio can be used as a tool for creating virtual video prototypes and conducting design workshops in which digital 3D worlds can be incorporated.

At times, the blue screen studie as a room has also been used as a blue background for producing high quality non-realtime videos, where time consuming post-rendering has been crucial to generate advanced effects or a more realistic and detailed look than possible with real-time generated video.