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Vast majority of digital images and video material stored today can capture only a fraction of visual information visible to the human eye and does not offer sufficient quality to fully exploit capabilities of new display devices. High dynamic range (HDR) image and video formats encode the full visible range of luminance and color gamut, thus offering ultimate fidelity, limited only by the capabilities of the human eye and not by any existing technology. In this paper we demonstrate how existing image and video compression standards can be extended to encode HDR content efficiently. This is achieved by a custom color space for encoding HDR pixel values that is derived from the visual performance data. We also demonstrate how HDR image and video compression can be designed so that it is backward compatible with existing formats.