Compression quality
* Lossy codecs: Many of the more popular codecs in the software world are lossy, meaning that they reduce quality by some amount in order to achieve compression. Smaller data sets ease the strain on relatively expensive storage sub-systems such as non-volatile memory and hard disk, as well as write-once-read-many formats such as CD-ROM, DVD and Blu-ray Disc.
* Lossless codecs: There are also many lossless codecs which are typically used for archiving data in a compressed form while retaining all of the information present in the original stream. If preserving the original quality of the stream is more important than eliminating the correspondingly larger data sizes, lossless codecs are preferred. Especially if the data is to undergo further processing (for example editing) in which case the repeated application of processing (encoding and decoding) on lossy codecs will degrade the quality of the resulting data such that it is readily identifiable (visually, audibly or both). Using more than one codec or encoding scheme successively can also degrade quality significantly. The decreasing cost of storage capacity and network bandwidth has a tendency to reduce the need for lossy codecs for some media.
Codecs are often designed to emphasise certain aspects of the media to be encoded. For example, a digital video (using a DV codec) of a sports event, such as baseball or soccer, needs to encode motion well but not necessarily exact colours, while a video of an art exhibit needs to perform well encoding colour and surface texture. For example, audio codecs for cell phones need to be very low latency between a word being spoken and that word being heard; while audio codecs for recording or broadcast can use high-latency audio compression techniques to achieve higher fidelity at a lower bit-rate.
There are thousands of audio and video codecs ranging from those downloadable for free to ones costing hundreds of dollars or more. This variety of codecs can create compatibility and obsolescence issues. By contrast, raw uncompressed PCM audio (44.1 kHz, 16 bit stereo, as represented on an audio CD or in a .wav or .aiff file) offers more of a persistent standard across multiple platforms and over time.
Many multimedia data streams need to contain both audio and video data, and often some form of metadata that permits synchronisation of audio and video. Each of these three streams may be handled by different programs, processes, or hardware; but for the multimedia data stream to be useful in stored or transmitted form, they must be encapsulated together in a container format.
The widely spread notion of AVI being a codec is incorrect as AVI is a container format, which many codecs might use (although not to ISO standard). There are other well-known alternative containers such as Ogg, ASF, QuickTime, RealMedia, Matroska, DivX, and MP4.