The efficient digital representation of image and video signals has been the subjective of considerable research because of the wide range of emerging applications, and multimedia image/video database services. Modern image and video compression techniques offer the possibility to store or transmit the vast amount of data necessary to represent digital image and video in an efficient and robust way.To meet the needs of the foregoing applications, the Motion Picture Expert Group (MPEG) was formed to develop coding standards. Within the compression process of the MPEG, several points were restrictedly fixed. However, several other points were left for the designer. This creates what could be called "control points", by varying some parameters, one can control the system performance. These parameters are: motion estimation. Discrete Cosine Transform (DCT) and quantization. During this research, a computer software was written using Matlab 5.1 that can be used to vary a certain free points. Two methods for motion estimation were tested on two video images. The first one, Exhaustive (EXS) method, was proved better than the second method, Modified One-at- a Time-Search (MOTS), from direct prediction error point of view. But it is time consuming to use the first method. The DCT is a corner stone in the MPEG technique. Treating the interframes depends on the amount of error, so B-fram.es are treated more coarsely than P-frames, because B-frames have less prediction error. The last free parameter is the quantizer design, which was left as it is suggested by the MPEG.