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Variable Bitrate, or VBR, refers to a video or audio stream encoded with variance in bitrate over time. While Constant Bitrate (CBR) encoding divides the bits evenly throughout the stream, the bitrate of a VBR encoded stream may have large changes over time. Variable Bitrate encoding implies that some sort of Compression is being applied. While this is often Lossy Compression, it can also be lossless.
VBR video will usually give you better quality than CBR for severely bitrate Limited formats, including DVD and MPEG-4. Formats designed more for editing, like DV, are better suited for CBR.
Unlike video encoding, where VBR encoding dominates most consumer video formats, for audio CBR encoding is more prevalent. MP3 and AAC music files sold through online music stores are often CBR, but as with video better quality can be achieved at the same bitrate using VBR. Other formats, like the Dolby Digital files used on DVDs, are always encoded at a Constant Bitrate. Lossless audio compression formats like FLAC also use VBR encoding.
Average Bitrate, or ABR, is one strategy used for VBR encoding. If you need to to fit your video to a specific size, such as 700MB for a CD or 4.37GB for single layer DVD, you can set an Average Bitrate to ensure the PROPER size. This gives you the quality advantage of VBR encoding, as well as the predictable size of CBR. Most consumer video sources, such as DVD, HD DVD, and Blu-ray, have video encoded to an Average Bitrate.
Many video encoders have an option to use a bitrate distribution method intended to achieve a consistent visual quality level throughout a file. This will often be referred to as Constant Quality, and is typically faster than ABR encoding because it only requires a single pass, rather than two or more. The actual ability of different encoders to deliver the same quality throughout an Encode varies by the algorithms used to measure quality, and of course by the subjective taste of the viewer. Unlike ABR encoding. Constant Quality doesn't guarantee a particular file size, and is therefore not generally advisable if you're concerned about getting an output file of a predetermined size.
Hardware Encoders and VBR
Consumer hardware video encoders are designed to encode in a single pass, and only in realtime. Although they may be capable of VBR encoding, due to limitations from encoding in a single pass, a high quality encode almost always requires a higher bitrate than a software encoder would need to use.
The biggest drawback to VBR encoding is the risk of bitrates too high or low to be decoded properly later. For example, if you have a device that can playback video in a particular format when encoded at 5000kbps that means it can play CBR video with that exact bitrate. However, if you have VBR encoded video with an Average Bitrate of 4000kbps, but a peak bitrate of 6000kbps, it may not be playable. You may also get errors if the bitrate gets too low, and a decoder runs out of information.
The size of any stream (video, audio, or otherwise) can be calculated by multiplying the bitrate its encoded at by its length. When calculating filesize based on bitrate you also have to take into account any overhead introduced by the Container being used, such as AVI or MPEG. Container overhead varies from one to another, and can even be affected by the number or type of streams being muxed.
Although most computer oriented applications measure bitrate in terms of binary kilobits and Megabits where 1kb (1 kilobit) = 1024 bits and 1Mb (1 Megabit) = 1024 kilobits, bitrate calculations use standard metric values for these prefixes, meaning 1kb = 1000b and 1Mb = 1000kb. Bitrate calculations are typically made in kilobits per second (kbps) or Megabits per second (Mbps). They can also be expressed in other units, including bits per second (bps) or even Megabytes per second (MBps). Notice the capital B denoting Bytes. You should always use a lower case b to denote bits and upper case for Bytes.
Online Bitrate Calculators
A simple DVD/SVCD/DivX bitrate calculator
Another DivX bitrate calculator
3IVX Bitrate Calculator
Digital Video Fundamentals - Lossy Compression
Digital Video Fundamentals - MPEG-2 Encoding
HC Encoder Settings
Deciphering CCE Basic
TMPGEnc 4 - MPEG-2 and MPEG-1 Video Settings
Basic DVD Authoring Project Part 5 - Calculate Video Bitrates
How to play RMVB (RealMedia Variable Bitrate) files
Related glossary terms
Related software tools
Bitrate Viewer (Shareware)
A handy little tool that displays the DVD bitrate in a graphical form.
XviD Bitrate Calculator (Freeware)
Nice little bitrate and resolution calculator for XviD videos, which does everything you can ask from a bitrate calculator. Only nag is the installation of the tool, which can get painful.