My sister is a photographer and is using Smugmug as a way to sell her pictures. For those not familiar, Smugmug will allow you to upload your pictures and set a price that a customer can purchase the picture. Smugmug will then take care of the printing/shipping/credit cards, etc. Obviously there is a fee, but it's an easy way to not have to worry about the back end processing.

I was looking at it and it will also allow you to upload videos and then set a price to sell the downloaded file. They'll let you set the price for different resolutions. So for example after a wedding I could put up a highlight video and sell the 1080p version for $x.xx, but the mobile phone version would be cheaper.

I was thinking that this may be an opportunity to sell copies to uncles/aunts, etc. who probably won't get a full DVD. Has anyone tried a pricing model like this? Was there any success?

I've thought about this but decided to stick to using a physical disk format. It's kinda - selling a copy of something you can readily watch for free.. One approach I thought was to provide a preview online as a segway to selling a full video, but the effort to do the preview just didn't make sense for the amount of sales.
I do have Smugmug for photos and it works well.. but with their price increase, I am considering moving to Zenfolio.