This paper describes a hybrid motion-compensated wavelet transform cod
er designed for encoding video at very low bit rates. The coder and it
s components have been submitted to MPEG-4 to support the functionalit
ies of compression efficiency and scalability. Novel features of this
coder are the use of overlapping block motion compensation in combinat
ion with a discrete wavelet transform followed by adaptive quantizatio
n and zerotree entropy coding, plus rate control, The coder outperform
s the VM of MPEG-4 for coding of I-frames and matches the performance
of the VM for P-frames while providing a path to spatial scalability,
object scalability, and bitstream scalability.