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  What is H.264?  
H.264 is a new video compression scheme that is becoming the worldwide digital video standard for consumer electronics and personal computers.

In particular, H.264 has already been selected as a key compression scheme (codec) for the next generation of optical disc formats, HD-DVD and Blu-ray disc (sometimes referred to as BD or BD-ROM).

H.264 has been adopted by the Motion Picture Experts Group (MPEG) to be a key video compression scheme in the MPEG-4 format for digital media exchange. H.264 is sometimes referred to as “MPEG-4 Part 10” (part of the MPEG-4 specification), or as “AVC” (MPEG-4’s Advanced Video Coding).

This new compression scheme has been developed in response to technical factors and the needs of an evolving market:
MPEG-2 and other older video codecs are relatively inefficient.  
Much greater computational resources are available today.  
High Definition video is becoming pervasive, and there is a strong need to store and transmit more efficiently the higher quantity of data of HD (about 6 times more than Standard Definition video).  
  Why H.264 is The Next Big Thing  
  Quality and Size (Bit-rate)
H.264 clearly has a bright future, mostly because it offers much better compression efficiency than previous compression schemes.
  The improved efficiency translates into three main benefits, or a combination of them:  
   Higher video quality at a given bit-rate: reduction in artifacts such as blockiness, color bands etc.  
   Higher resolution: as the video world transitions to High Definition, a mechanism is needed to deliver it.  
   Lower storage requirements: lower storage requirements will allow for large amounts of content to be delivered on
     a single disc.
  While a more detailed comparison of MPEG-2 to H.264 is given below, a high-level comparison is illustrated by this graph.  
  Here we see that for a given bit-rate, the level of video quality or resolution (both of these contribute to greater bit-rate) for H.264 can be higher than for MPEG-2.  
  Comparison to MPEG-2  
MPEG-2 is today's dominant video compression scheme; it is used to encode video on DVDs, to stream internet video and is the basis for most worldwide digital television (over-the air, cable and satellite) While MPEG-2 is a video-only format, MPEG-4 is a more generic media exchange format, with H.264 as one of several video compression schemes offered by MPEG-4.
  Entropy encoding:  
Entropy encoding is a technique used to store large amounts of data by examining the frequency of patterns within it and encoding this in another, smaller, form. H.264 allows for a variety of entropy encoding schemes, compared to the fixed scheme employed by MPEG-2. In particular, the new CABAC (Context-based Adaptive Binary Arithmetic Coding) scheme adds 5-20% of compression efficiency but is much more computationally demanding than MPEG-2’s entropy encoding.
  Smaller block size:  
MPEG-2, H.264, and other most other codecs treat portions of the video image in blocks, often processed in isolation from each another. Independently of the number of video pixels in the image, the number of blocks has an effect of the computational requirements.

While MPEG-2 has a fixed block size of 16 pixels on a side (referred as 16x16), H.264 permits the simultaneous mixing of different block sizes (down to 4x4 pixels). This permits the codec to accurately define fine detail (with more, smaller blocks) while not having to ¡®waste¡¯ small blocks on coarse detail. In this way, for example, patches of blue sky in a video image can use large blocks, while the finer details of a forest in the frame could be encoded with smaller blocks.
  Computational Overhead - The Problem  
As we have seen, particularly in comparison to MPEG-2, H.264 delivers the means for the next wave of video to move efficiently to High Definition, but at a very high computational cost. Below is a comparative view of the computational requirements of MPEG-2 and H.264 broken down by the steps involved. The processing requirements are in terms of a high-end PC CPU available today. The bar drawn in the image shows the point at which the CPU is 100% loaded.
The fact that processing is required above and beyond what a PC CPU can provide today has disconcerting ramifications for playback of High Definition discs on the PC ¨C unless a means can be found to offload (accelerate) some of the tasks to another part of the system.
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