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The easiest answer is taking footage from a tape (an analog source) and stuffing it into a computer (thus rendering it digital), clever stuff see. Essentially encoding is the method by which we transfer video and audio source material into a wide variety of formats depending on your need (DVD-Video, Web Downloads, Network Streaming or whatever).

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For example all the stuff on a DVD is MPEG 2 - that's the law unless its a DVD ROM and that's a whole bunch of grapes in itself. So we will just ignore that for now OK? So you have a programme or film on tape be it digi or mini DV it all has to be encoded in a digital form, which is MPEG 2. Now there's all that business with I frames, GOP’s and the like which is all rather technical and not very interesting. But what is interesting is the bitrate now this is to do with the final quality of encoded video.
Now you would assume that you encode everything at the highest bitrate and we are laughing. Yes we would be as your DVD player is unlikely to be able to play it. So now we encode it at an acceptable quality which maybe 8 mbs but when we have finished authoring the DVD it wont fit on the disk! So there's your trade off the higher the bitrate the more space it takes on the disk. There are also two sizes of disk used, OK - there are more but no one else bothers with them so neither do we! One is a DVD 5 which holds 4.7 gigabytes and the other is a DVD 9 which has space for 8.5 gigabytes or if you prefer a DVD 5 will take sensibly 90 minutes of video and a DVD 9 will put up with 3 hours of video. They will take more but quality starts to take a turn for the worst!
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