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Digital video coding standards such as MPEG-4 simple profile and H.263 are becoming popular in mobile multimedia applications. Mobile multimedia applications demand low power and low processing power. MPEG-4 simple profile and H.263 encoding requires huge amount of processing power, motion estimation being the most complex of the encoding process. Extensive research has led to the development of fast motion estimation algorithms. Fast motion estimation algorithm consumes about 40% of the encoding time as compared to 90% taken by exhaustive search algorithm. In this paper, low bit-rate video data has been analyzed and based upon the statistical characteristics, discrete cosine transform, quantization, variable length encoding, inverse discrete cosine transform and inverse quantization are optimized. The experiments are conducted on ARM9TDMI core, which is widely used in 2.5G & 3G handheld and mobile devices. The results show that significant gain in encoding speed can be obtained without any subjective quality degradation and negligible objective quality degradation.