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Using Windows Media Encoder, you can encode audio and video content at either a constant bit rate (CBR) or a variable bit rate (VBR).
CBR encoding is designed to work most effectively in a streaming scenario. With CBR encoding, the bit rate remains fairly constant and close to the target bit rate over the course of the stream, within a small window of time set by the buffer size. The disadvantage of CBR encoding is that the quality of the encoded content is not constant. Because some pieces of content are more difficult to compress than others, some parts of a CBR stream are of lower quality than others. In addition, CBR encoding results in inconsistent quality from one stream to the next. In general, quality variations are more pronounced at lower bit rates.
Use VBR encoding when you plan to distribute the content for downloading and playing either locally or on a device that has a constrained reading speed, such as a CD or DVD player. (You can also use the peak VBR encoding mode when you plan to stream the content.) VBR encoding is most advantageous when encoding content that is a mix of simple and complex data, for example, a video that switches between slow and fast motion. With VBR encoding, fewer bits are automatically allocated to less complex portions of the content, leaving enough bits available to produce good quality for more complicated ones. This means that content that has consistent complexity (for example, a "talking head" news story) would not benefit from VBR encoding. When used on mixed content, VBR encoding produces a much better encoded output given the same file size when compared to CBR encoding. In some cases, you can end up with a VBR-encoded file that has the same quality as a CBR-encoded file in half the file size.
With CBR encoding, you can use one- or two-pass encoding. You have three VBR encoding options: quality-based VBR (one-pass), bit rate-based (two-pass), and peak bit rate-based VBR (two-pass). Not all codecs support two-pass CBR encoding or VBR encoding.