A video source, a display and a method of processing multilayered video are disclosed. The video source decodes a multilayered video bit stream to transmit synchronized streams of decompressed video images and corresponding overlay images to an interconnected display. The display receives separate streams of video and overlay images. Transmission and reception of corresponding video and overlay images is synchronized in time. A video image received in the display can be selectively processed separately from its corresponding overlay image. The video image as processed at the display is later composited with its corresponding overlay image to form an output image for display.