An illumination system includes a backlight housing, a plurality of light valves coupled to the backlight housing, and a plurality of light sources arranged in the backlight housing and optically coupled to the light valves. The illumination system may further include a light-scattering substrate optically coupled between the plurality of light sources and the light valves, and a plurality of light modulating dots patterned on the substrate to modulate transmitted intensity of light from the plurality of light sources to achieve increased luminance uniformity by decreasing banding caused by the separated light sources. The light modulating dots may include comprise reflective dots, transmissive dots, absorptive dots, or a combination thereof.