Motion Compensated Prediction
Much of the required data in frame-differential coding can be eliminated by comparing the present pixel not to the same spatial location in the previous frame, but to the location of the same object in the previous frame. The encoder is required to estimate the motion in the image in order to find the corresponding area in a previous frame.
In motion compensated prediction, the encoder searches for a portion of a previous frame which is similar to the part of the new frame to be transmitted. It then sends (as side information) a motion vector telling the decoder what portion of the previous frame it will use to predict the new frame. It also sends the prediction error so that the exact new frame may be reconstituted.
Note that an accurate estimation of object motion is not an absolute requirement -- it is helpful to find any part of the previous frame that is similar to the current frame.
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