Based on this tutorial: http://www.linuxjournal.com/content/overlay-images-video-using-mplayer-and-mencoder

mencoder -oac pcm -ovc raw -vf bmovl=0:0:tfifo -o $output $file

vf_bmovl: Unknown command: ''. Ignoring.  

If you get this error use ffmpeg instead and follow this quick/easy tutorial

Full script as follows does not work on mencoder on Linux Mint 17:

MEncoder 1.1-4.8 (C) 2000-2012 MPlayer Team
 

#!/bin/bash
#does work error
#vf_bmovl: Unknown command: ''. Ignoring.

watermark=$1
watermark="FINAL.jpg"
watermark_height=600
watermark_width=500
file=$2
output=$file-watermark.mp4
if [ -z "$watermark" ] || [ -z "$file" ]; then
   echo "Usage $0 watermarkfile.jpg file.mp4"
   exit 1
fi
#convert watermark to rgba
convert $watermark tlogo.rgba
#Copy logo to fifo
rm -f tfifo
mkfifo tfifo

(echo "RGBA32 500 600 0 0 0 1" ; cat tlogo.rgba ) >tfifo &
mencoder -oac pcm -ovc raw -vfm bmovl=0:0:$watermark -o $output $file


rm -f tfifo
rm -f tlogo.rgba
 

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