Video Codecs 101: How Video Compression Powers Streaming

According to YouTube, over 20 million videos are uploaded daily on YouTube alone. Other platforms like TikTok, Instagram, Twitch, and Facebook also upload millions more. Behind every smooth stream, crisp 4K broadcast, and buffer-free video call on streaming platforms sits a video codec.

A video codec is software or hardware that compresses raw video data into smaller files and decompresses them for playback.

Without codecs, a single minute of uncompressed video would consume several gigabytes of storage—making streaming, sharing, and storing video content practically impossible.

Whether you’re a live streamer broadcasting to Twitch and YouTube, a content creator producing educational videos, or a business running webinars, understanding video codecs gives you control over your stream quality, file sizes, and audience reach. The codec you choose affects everything from how sharp your video looks to whether your viewers can actually watch it on their devices.

This guide covers everything you need to know about video codecs: how they work, the differences between popular options like H.264, H.265, VP9, and AV1, and how to choose the right codec for your specific streaming needs.

What Is a Video Codec?

A video codec is a compression technology that encodes video data into a compressed format for storage or transmission, then decodes it for playback. The term “codec” combines two words: “coder” and “decoder”—describing exactly what this technology does.

Here’s why codecs matter: raw video files are massive. One minute of uncompressed 1080p video at 30 frames per second requires approximately 10 GB of storage. That same minute, compressed with a modern codec, shrinks to around 100-200 MB while maintaining visual quality that most viewers can’t distinguish from the original.

The Coder Function

The coder (or encoder) analyzes your source video and applies mathematical algorithms to reduce file size. It identifies patterns, removes unnecessary data, and creates a compressed video file that’s small enough to stream or store efficiently. This video encoding process occurs before your content reaches viewers—either in real time during live streaming or beforehand for pre-recorded content.

The Decoder Function

The decoder reverses this process. When a viewer watches your stream or video, the codec decompresses the compressed video data and reconstructs it for display. Every device that plays video—smartphones, computers, smart TVs, gaming consoles—has built-in decoders for common codecs.

The relationship between these two functions determines everything about your video’s quality, file size, and compatibility. A codec that compresses efficiently but lacks widespread decoder support creates video files that many viewers simply can’t watch.

How Do Video Codecs Work?

Video codecs reduce file sizes through a process called video compression, which removes redundant information while preserving visual quality. Understanding this compression process helps you make better decisions about codec settings and quality trade-offs.

The Encoding Process

During encoding, the codec analyzes your video frame by frame and applies two main types of compression:

Spatial compression looks at each individual frame and finds patterns within it. If a large portion of a frame contains the same color (like a blue sky or solid background), the codec stores that information once rather than recording every pixel separately. This technique uses mathematical methods like the discrete cosine transform to identify and compress repetitive visual patterns.

Temporal compression compares frames over time. In most videos, large portions of each frame remain unchanged from one moment to the next. A talking-head video, for example, might have a static background that stays identical across hundreds of frames. The codec stores this background information once and only records the changes (like the speaker’s moving lips and gestures).

This is where keyframes become important. A keyframe (also called an I-frame) contains complete image data—a full picture that doesn’t reference any other frames. Between keyframes, the codec creates predicted frames (P-frames and B-frames) that only store the differences from previous or surrounding frames. This dramatically reduces file size while maintaining smooth playback.

The Decoding Process

When your video reaches a viewer, the decoding process reverses everything. The codec decompresses the data, reconstructs the predicted frames using the keyframe references, and outputs the full video for display.

This decoding happens in real-time, which is why hardware support matters. Devices with dedicated video decoding chips can play high-resolution content smoothly, while devices relying on software decoding may struggle with demanding codecs or high bitrates.

Lossy vs. Lossless Compression

Most video codecs use lossy compression, which permanently removes some data to achieve smaller file sizes. The goal is to discard information that human eyes won’t notice—subtle color variations, fine details in fast-moving scenes, or patterns below the threshold of perception.

Lossless compression preserves every bit of the original video data but achieves much smaller size reductions. Lossless codecs are primarily used in professional video editing workflows where maintaining the highest possible quality matters more than file size.

For streaming, lossy codecs are the standard. The quality loss is imperceptible to viewers, and the bandwidth savings make smooth playback possible even on slower internet connections.

Types of Video Codecs: A Complete Overview

Before examining individual codecs, it’s important to understand the difference between a codec and a container. A video codec (like H.264 or H.265) handles the compression and decompression of video data. A video container format (like MP4, MKV, or the Ogg container format) is a file format that packages the compressed video together with audio, subtitles, and metadata.

The same video codec can be stored in different container formats. An H.264 video might be packaged as an MP4 file, an MKV file, or other media files, depending on your needs. When choosing settings for your streams, you’ll need to consider both the codec and the container format.

Video codecs generally fall into three categories:

Legacy codecs like MPEG-2 and MPEG-4 Part 2 were groundbreaking in their time but have been largely replaced by more efficient options. You’ll still encounter these in broadcast television and older media files.

Current-generation codecs like H.264 and H.265 represent the workhorses of modern streaming. These codecs balance compression efficiency with broad compatibility and reasonable processing power requirements.

Next-generation codecs like VP9 and AV1 push compression efficiency further while remaining royalty-free. These are gaining adoption but still face hardware support limitations.

Let’s examine each major codec in detail.

H.264 (AVC): The Universal Standard

H.264, also known as Advanced Video Coding (AVC) or MPEG-4 Part 10, is the most widely used codec for streaming, video conferencing, and online videos. Released in 2003, it remains the default choice for content creators who need guaranteed compatibility. H.264/AVC video codec delivers high-quality streaming at low bitrates.

Key characteristics of H.264:

• Supported by virtually any device manufactured in the last 15 years
• Works in all major web browsers without plugins
• Excellent hardware encoding and decoding support
• Reasonable processing power requirements
• Widely supported by all major streaming platforms

The AVC codec became dominant because it offered a significant improvement over earlier codecs while maintaining broad compatibility. Every smartphone, tablet, computer, smart TV, and gaming console can decode H.264 video without issues. This universal support makes it the safest choice for reaching the widest possible audience.

Strengths:

• Maximum compatibility across all playback platforms
• Fast encoding with hardware acceleration (NVENC, QuickSync, AMF)
• Low decoder requirements—even older devices handle it smoothly
• Accepted by every major streaming platform (YouTube, Twitch, Facebook, etc.)

Limitations:

• Less efficient than newer codecs—larger file sizes for equivalent quality
• Requires higher bitrates for 4K content
• Licensing fees apply for commercial use (though typically handled by platform/software providers)

Best use cases: Live streaming to multiple platforms, content requiring maximum device compatibility, and situations where encoding speed matters more than file size.

Recommendation: Choose H.264 when you need guaranteed playback across all devices and platforms. It’s the right codec for most streamers who prioritize reach over cutting-edge efficiency.

H.265 (HEVC): The Efficiency Upgrade

H.265, officially named High Efficiency Video Coding (HEVC), delivers approximately 50% better compression than H.264 at equivalent visual quality. This means you can stream the same quality video at half the bitrate—or achieve noticeably better quality at the same bitrate.

Released in 2013, H.265 was designed specifically to handle the demands of 4K and high dynamic range content. As streaming resolutions increased, the bandwidth requirements of H.264 became problematic. H.265 addressed this by dramatically improving compression efficiency.

Key characteristics of H.265:

• 50% smaller files compared to H.264 at the same quality
• Essential for practical 4K streaming
• Growing device support, especially on Apple devices and newer hardware
• More computationally intensive to encode
• Licensing fees and royalty structures are more complex than H.264

Strengths:

• Dramatically reduced bandwidth requirements
• Superior quality at lower bitrates
• Excellent for 4K and high-resolution streaming
• Strong support on iOS, macOS, and modern Android devices
• Increasingly supported by living room devices and smart TVs

Limitations:

• Not universally supported—some older devices and browsers can’t decode it
• Slower encoding, requiring more processing power
• Complex licensing situation for commercial applications
• Browser-based playback support is inconsistent

Best use cases: 4K streaming, bandwidth-limited situations, content primarily viewed on modern devices, workflows with transcoding capabilities.

Recommendation: Choose H.265 when streaming 4K content, when bandwidth is limited, or when you have a transcoding solution that can convert to H.264 for devices with compatibility issues.

VP9: Google’s Open-Source Alternative

VP9 is a royalty-free video codec developed by Google as an open-source alternative to H.265. It offers similar compression efficiency to HEVC without the licensing fees, making it attractive for commercial applications. It offers improved compression and video quality at lower bitrates than VP8.

Google developed VP9 primarily for YouTube, which uses it as the default playback codec for most high-quality video. If you’ve watched a 1080p or 4K video on YouTube recently, you’ve experienced VP9 decoding.

Key characteristics of VP9:

• Compression efficiency comparable to H.265
• Completely royalty-free—no licensing fees
• Native support in Chrome, Firefox, and Edge browsers
• Strong Android device support
• Used extensively by YouTube for video playback

Strengths:

• No licensing costs for commercial use
• Excellent browser support (except Safari, which added support recently)
• YouTube optimizes playback using VP9
• Good balance of efficiency and compatibility

Limitations:

• Slower encoding compared to H.264
• Limited hardware encoding support on consumer GPUs
• Not as widely supported as H.264 on older devices
• Being gradually superseded by AV1

Best use cases: YouTube content, projects requiring royalty-free codecs, web-focused video distribution.

Recommendation: VP9 is ideal for YouTube creators and situations where you need H.265-level efficiency without licensing concerns. For live streaming, H.264 typically remains more practical due to encoding speed requirements.

AV1: The Future of Video Compression

AV1 represents the next generation of video compression, developed by the Alliance for Open Media (AOMedia)—a consortium of major technology companies including Google, Netflix, Amazon, Apple, Microsoft, and others. This royalty-free video codec offers approximately 30% better compression than H.265.

The AOMedia Video 1 codec was designed to address both the efficiency limitations of older codecs and the licensing complexities of H.265. By creating an open, royalty-free standard backed by major content distributors and technology companies, AV1 aims to become the universal codec for the next decade of video.

Key characteristics of AV1:

• 30% better compression than H.265, 50%+ better than H.264
• Completely royalty-free and open-source
• Backed by major streaming platforms (Netflix, YouTube, Amazon)
• Very slow software encoding
• Limited but growing hardware support

Strengths:

• Best-in-class compression efficiency
• No licensing fees ever
• Industry-wide backing ensures long-term support
• Excellent for bandwidth-constrained delivery
• Netflix and YouTube already use AV1 for some content

Limitations:

• Extremely slow software encoding—impractical for live streaming without hardware support
• Hardware encoding only available on newest GPUs (NVIDIA RTX 40 series, Intel Arc, AMD RX 7000 series)
• Device support still limited, especially on older hardware
• Not yet practical for most live streaming applications

Best use cases: Pre-recorded content where encoding time isn’t critical, platforms with AV1 hardware encoding support, future-proofing content archives.

Recommendation: Consider AV1 for pre-recorded content if you have hardware encoding support. For live streaming, wait until hardware support becomes more widespread—likely within the next 2-3 years.

Other Notable Codecs

Several other codecs serve specific purposes outside mainstream streaming:

Apple ProRes is a professional editing codec designed for video production workflows. It prioritizes editing performance over compression efficiency, resulting in large files that maintain quality through multiple edit generations. ProRes is not used for streaming but is common in professional video production.

DNxHD/DNxHR serves a similar purpose for Avid editing systems. Like ProRes, it’s an intermediate codec for editing rather than delivery.

MPEG-2 is a legacy codec still used in broadcast television, DVDs, and cable broadcasting. While outdated for streaming, you may encounter it when working with broadcast content.

Versatile Video Coding (VVC/H.266) is the successor to H.265, offering another 50% efficiency improvement. However, it’s still in early adoption stages and not yet relevant for most streaming applications.

Essential Video Coding (EVC) is another new codec designed as a more licensing-friendly alternative to VVC. Like VVC, it’s too new for practical streaming use.

Video Codec Comparison: H.264 vs H.265 vs VP9 vs AV1

Choosing between codecs requires understanding their trade-offs across multiple factors. This comparison focuses on the four codecs most relevant to streamers and content creators.

Compression Efficiency Analysis

The quality and compression rate differences between codecs become significant at higher resolutions. For 1080p content, H.264 performs adequately with reasonable bitrates. For 4K content, the efficiency gains of H.265 or AV1 become much more valuable.

At 4K resolution, H.264 might require 20-35 Mbps for good quality, while H.265 achieves similar results at 10-15 Mbps. This difference matters both for your upload bandwidth and your viewers’ download speeds.

Compatibility Considerations

Not all playback platforms accept every codec. While H.264 works everywhere, other codecs face limitations:

• H.265: Works on Apple devices, most smart TVs, newer Android devices, and Safari. Limited support in Chrome and Firefox for web playback.
• VP9: Excellent in Chrome, Firefox, and Edge. Works on Android. Limited on iOS and older devices.
• AV1: Supported in Chrome and Firefox. Growing device support but still limited on mobile and living room devices.

For streamers targeting the widest audience, these compatibility issues matter. A viewer on an older device or unsupported browser simply can’t watch your content if you use a codec their system doesn’t support.

Winner by Category

Best compatibility: H.264—works on virtually any device without issues.

Best efficiency: AV1—offers the smallest files at equivalent quality.

Best balance for streaming: H.265—significant efficiency gains with reasonable compatibility.

Best for YouTube: VP9—YouTube re-encodes everything anyway and optimizes for VP9 playback.

Best for live streaming today: H.264—fast encoding, universal support, no compatibility headaches.

How to Choose the Right Video Codec for Your Needs

The right codec depends on your specific situation: what you’re streaming, where you’re streaming it, and who’s watching. Here’s a decision framework based on common use cases.

For Live Streamers (Twitch, YouTube, Facebook)

If you’re streaming live to platforms like Twitch, YouTube Live, or Facebook Gaming, H.264 is your best choice for most situations.

Here’s why: live streaming requires real-time encoding, which means you need a codec that encodes quickly without overwhelming your CPU or GPU. H.264 has excellent hardware encoding support through NVIDIA NVENC, AMD AMF, and Intel QuickSync. You can stream at high quality while still having processing power available for your game or application.

Platform requirements also favor H.264:

• Twitch recommends H.264 with a maximum bitrate of 6,000 Kbps for non-partners
• YouTube Live accepts H.264 and handles transcoding on their end
• Facebook Live works best with H.264 for maximum viewer compatibility

When to consider H.265 for live streaming: If you’re streaming 4K content and have a transcoding solution that converts to H.264 for incompatible devices. This gives you the bandwidth efficiency of H.265 while maintaining universal reach.

For Video Creators and YouTubers

If you’re creating pre-recorded content for YouTube, your codec choice matters less than you might think. YouTube re-encodes every uploaded video regardless of your original codec, converting it to VP9 or AV1 for playback.

Recommended approach:

1. Upload in H.264 for fastest, most reliable uploads
2. Use high bitrate settings (higher than you’d use for streaming) since YouTube will re-compress
3. Focus on source video quality rather than codec efficiency

YouTube’s processing handles the optimization for different devices and connection speeds. Your job is to provide the highest quality source material possible.

For other platforms or self-hosted video, H.264 remains the safest choice for maximum compatibility.

For Businesses and Webinars

Business video applications—webinars, training videos, corporate communications—prioritize reliability and accessibility over cutting-edge efficiency.

Recommended approach:

1. Use H.264 for all live events to ensure every participant can view the content
2. Test playback on the devices your audience uses before important events
3. Consider bandwidth limitations if participants have varying internet quality

For businesses streaming to multiple platforms or embedding video on websites, compatibility issues can mean lost viewers and frustrated customers. The efficiency gains of newer codecs rarely justify the risk of playback problems.

For Multi-Platform Streaming

Streaming to multiple platforms creates a unique challenge: different platforms have different requirements, and your viewers use different devices with varying codec support.

The traditional approach—encoding separate streams for each platform—is technically complex and bandwidth-intensive. You’d need to run multiple encoders or use expensive hardware solutions.

A better approach uses transcoding: stream once in your preferred codec, and let a transcoding service convert your stream to the appropriate format for each platform. This gives you the efficiency benefits of modern codecs while ensuring compatibility everywhere.

This is where streaming platforms with built-in transcoding become valuable. Rather than managing codec complexity yourself, you can focus on your content while the platform handles format conversion automatically.

Video Codec Settings: Bitrate, Resolution, and Quality Optimization

Choosing the right codec is only part of the equation. Your codec settings—particularly bitrate, resolution, and encoder presets—determine the actual quality your viewers experience.

Understanding Bitrate

Bitrate measures how much data your video uses per second, typically expressed in Kbps (kilobits per second) or Mbps (megabits per second). Higher bitrate means more data, which generally translates to better quality—but also larger file sizes and higher bandwidth requirements.

The relationship between bitrate and quality isn’t linear. Doubling your bitrate doesn’t double your quality. There’s a point of diminishing returns where additional bitrate provides minimal visible improvement.

Recommended bitrates for H.264 streaming:

For H.265, you can typically use 40-50% lower bitrates for equivalent quality.

CBR vs. VBR: Constant Bitrate (CBR) maintains the same bitrate throughout your stream, which is more predictable for live streaming. Variable Bitrate (VBR) adjusts based on scene complexity, which can improve quality for pre-recorded content but may cause buffering issues during live streams.

For live streaming, use CBR. For recording or pre-recorded uploads, VBR often produces better results.

Resolution and Frame Rate

Your resolution and frame rate choices should match both your content type and your available bandwidth.

Resolution considerations:

• 720p works well for most content and requires modest bandwidth
• 1080p is the current standard for high quality videos
• 1440p offers a middle ground for viewers with larger displays
• 4K provides maximum detail but requires significant bandwidth and processing power

Frame rate considerations:

• 30 fps is sufficient for most content: talking heads, tutorials, podcasts, most games
• 60 fps is preferred for fast-motion content: competitive gaming, sports, action sequences

Not sure which frame rate fits your stream? Learn the difference between 30fps and 60fps.

Higher frame rates require proportionally higher bitrates. A 1080p60 stream needs roughly 30-50% more bitrate than 1080p30 for equivalent quality.

Match your settings to your content: A podcast doesn’t benefit from 4K60—720p30 or 1080p30 is perfectly adequate. A competitive FPS game stream benefits significantly from 60 fps, even if you need to reduce resolution to maintain it.

Encoder Presets

Most encoding software offers presets that balance encoding speed against compression efficiency. Common preset names (from fastest to slowest):

• ultrafast
• superfast
• veryfast
• faster
• fast
• medium
• slow
• slower
• veryslow

Faster presets encode quickly but produce larger files (or lower quality at the same bitrate). Slower presets achieve better compression but require more processing power.

For live streaming: Use “veryfast,” “faster,” or “fast” presets. You need real-time encoding, and the quality difference compared to slower presets is minimal at streaming bitrates.

For recording: Use “medium” or “slow” presets if your system can handle it. The improved compression efficiency is worth the extra processing time.

For hardware encoding (NVENC, AMF, QuickSync): Preset names vary by manufacturer, but the same principle applies. Quality presets produce better results but use more GPU resources.

What Is Video Transcoding?

Video transcoding is the process of converting a video from one codec or format to another. For streamers, transcoding solves a fundamental problem: how do you use efficient modern codecs while ensuring every viewer can watch your content?

The distinction between encoding and transcoding is straightforward:

• Encoding compresses raw video into a compressed format (the first compression)
• Transcoding converts already-compressed video into a different compressed format (re-compression)

Why Transcoding Matters for Streaming

Different platforms and devices support different codecs. If you stream in H.265 for its efficiency benefits, viewers on older devices or certain browsers can’t watch. If you stream in H.264 for compatibility, you’re using more bandwidth than necessary.

Transcoding provides a solution: stream in your preferred codec, and convert to other formats as needed for different destinations.

Common transcoding scenarios:

1. H.265 to H.264 conversion: Stream in H.265 for bandwidth efficiency, transcode to H.264 for devices that don’t support HEVC
2. Multi-bitrate delivery: Create multiple quality versions of your stream (1080p, 720p, 480p) so viewers with slower connections can still watch
3. Multi-platform distribution: Convert your single stream into the optimal format for each platform you’re broadcasting to

The Challenge of Manual Transcoding

Managing transcoding yourself is technically complex. You’d need:

• Powerful hardware to handle real-time conversion
• Software configured for each output format
• Bandwidth to upload multiple streams
• Technical knowledge to troubleshoot issues

For most streamers and businesses, this complexity isn’t practical. The time and resources required to manage multi-format encoding manually would be better spent on content creation.

This is where streaming platforms with built-in transcoding become valuable. Rather than managing the technical infrastructure yourself, you can rely on cloud-based transcoding that handles format conversion automatically.

Mastering Video Codecs for Better Streaming

Understanding video codecs gives you control over three critical aspects of your streaming: quality, file size, and audience reach. The codec you choose affects how your content looks, how much bandwidth it requires, and whether your viewers can actually watch it.

Key takeaways from this guide:

• H.264 remains the safest choice for maximum compatibility across all devices and platforms. If you’re unsure which codec to use, H.264 won’t let you down.
• H.265 offers 50% better efficiency and is worth considering for 4K content or bandwidth-limited situations—especially if you have transcoding available to handle compatibility.
• VP9 and AV1 represent the future of royalty-free video compression, with AV1 expected to become dominant as hardware support improves.
• Transcoding solves the compatibility problem by letting you use efficient modern codecs while automatically converting for devices that need older formats.
• Your codec settings matter as much as codec choice. Proper bitrate, resolution, and encoder preset configuration determines the actual quality your viewers experience.

For streamers who want to focus on content rather than technical complexity, platforms with built-in transcoding and multi-platform distribution handle the codec management automatically. You stream once, and the platform ensures every viewer—regardless of their device or platform—can watch your content in optimal quality.

Castr’s transcoding feature lets you stream in modern, efficient codecs like H.265 while automatically converting to H.264 for platforms and devices that require it. You get the bandwidth benefits of advanced codecs without worrying about compatibility issues.

Ready to simplify your streaming workflow? Castr offers a free trial so you can experience automatic transcoding, robust video hosting, OTT features and multi-platform streaming without commitment.