A motion compensated video processing method includes encoding a video frame group I.sub.0 -I.sub.7 into one in which one frame I.sub.0 of the group is a basic input frame or `I `frame, and the other frames B.sub.1 -B.sub.7 are derived from calculating the difference between a current frame and two neighbouring frames so as to form `B ` frames. The `B ` frames are derived in a logarithmic progression. The `B ` frames are quantized by applying selective quantization weighting to predetermined input frames. Encoding can be of the forms described as open loop or closed loop, preferably open loop. Decoding can be achieved by applying inverse quantization weighting to the input frames prior to selective summnation in order to achieve a constant reconstruction error for each frame even though quantization errors carry over from each reconstruction stage.