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This paper describes a new video coding scheme based on a simplified block structure that significantly outperforms the coding efficiency of the ISO/IEC 14496-10 ITU-T H.264 advanced video coding (AVC) standard. Its conceptual design is similar to a typical block-based hybrid coder applying prediction and subsequent prediction error coding. The basic coding unit is an 8 × 8 block for inter, and an 8 × 8 or a 16 × 16 block for intra, instead of the usual 16 × 16 macroblock. No larger block sizes are considered for prediction and transform. Based on this simplified block structure, the coding scheme uses simple and fundamental coding tools with optimized encoding algorithms. In particular, the motion representation is based on a minimum partitioning with blocks sharing motion borders. In addition, compared to AVC, the new and improved coding techniques include: block-based intensity compensation, motion vector competition, adaptive motion vector resolution, adaptive interpolation filters, edge-based intra prediction and enhanced chrominance prediction, intra template matching, larger trans forms and adaptive switchable transforms selection for intra and inter blocks, and nonlinear and frame-adaptive de-noising loop filters. Finally, the entropy coder uses a generic flexible zero tree representation applied to both motion and texture data. Attention has also been given to algorithm designs that facilitate parallelization. Compared to AVC, the new coding scheme offers clear benefits in terms of subjective video quality at the same bit rate. Objective quality improvements are equally significant. At the same quality, an average bit-rate reduction of 31% compared to AVC is reported.