Existing motion picture rating systems in the EU only target viewers above age three although children become regular viewers at younger ages. Existing rating systems also classify motion pictures in terms of only their content although films differ substantially from conditions of natural perception and understanding films requires a film literacy. The overall objective of the proposed research was to assess systematically the role of: (a) natural perception, (b) cinematic techniques, (c) viewing experience and (d) cognitive development on the understanding of moving images. To this aim, three studies were conducted within the project. The first study was designed to see if babies can perceive the continuity of an action through the film cuts. It was already known that 12-month-old babies can predict other’s simple actions by performing goal-directed, anticipatory eye movements. However the studies testing this ability were using single run videos unlike the ones on TV. For this study, we recorded the actions from different camera angles and edited them together according to match-on-action editing technique, which is used by filmmakers to make edits unnoticeable. The results were surprising: 12 and 18-month-old babies were even better at action prediction when the actions were presented in multiple film shots. The second study was also designed on the basis of two concepts, one of which is from the developmental psychology (i.e. gaze following), and the other from the film studies (i.e. eye-line match). The eye-line match between two juxtaposed shots is based on the premise that an audience will want to see what the character on-screen is looking at. A film sequence with an eye-line match begins with a character looking at something off-screen, followed by a cut of another object or person. From a developmental perspective, it is well established that young infants turn in the direction that an adult has turned. The question was whether babies can still follow other’s gaze when the gazed object is presented in another film shot. The looking score (total of the correct looks, incorrect looks, and non-look) was significantly different between editing types (single vs multiple) and (babies vs adults). Babies at 12 and 18 month of age could successfully follow gaze in the unedited version but were less successful across edits. The third study was again designed on the basis of well-established concepts in developmental psychology (occlusion perception) and film studies (directional continuity). The studies on the developmental origins of occlusion perception show that by at least 6 months of age, infants are able to make anticipatory eye movements by fixating the leading edge of the occluder before an object reappears. It was not known however if babies can anticipate the right side of the screen when a horizontal movement is presented in two film shots. The results show that babies do not perceive the film cuts as occluders and can perceive the scene as a whole although it is presented from different camera angles because of the ongoing movement through the cut.