A Block Matching Algorithm is a way of locating matching macroblocks in a sequence of digital video frames for the purposes of motion estimation. The underlying supposition behind motion estimation is that the patterns corresponding to objects and background in a frame of video sequence move within the frame to form corresponding objects on the subsequent frame. This can be used to discover temporal redundancy in the video sequence, increasing the effectiveness of inter-frame video compression by defining the contents of a macroblock by reference to the contents of a known macroblock which is minimally different.

A block matching algorithm involves dividing the current frame of a video into macroblocks and comparing each of the macroblocks with a corresponding block and its adjacent neighbors in a nearby frame of the video (sometimes just the previous one). A vector is created that models the movement of a macroblock from one location to another. This movement, calculated for all the macroblocks comprising a frame, constitutes the motion estimated in a frame.

The search area for a good macroblock match is decided by the ‘search parameter’, p, where p is the number of pixels on all four sides of the corresponding macro-block in the previous frame. The search parameter is a measure of motion. The larger the value of p, larger is the potential motion and the possibility for finding a good match. A full search of all potential blocks however is a computationally expensive task. Typical inputs are a macroblock of size 16 pixels and a search area of p = 7 pixels.

Block-matching and 3D filtering makes use of this approach to solve various image restoration inverse problems such as noise reduction and deblurring in both still images and digital video.

Motion estimation is the process of determining motion vectors that describe the transformation from one 2D image to another; usually from adjacent frames in a video sequence. The motion vectors may relate to the whole image (global motion estimation) or specific parts, such as rectangular blocks, arbitrary shaped patches or even per pixel. The motion vectors may be represented by a translational model or many other models that can approximate the motion of a real video camera, such as rotation and translation in all three dimensions and zoom.

Applying the motion vectors to an image to predict the transformation to another image, on account of moving camera or object in the image is called motion compensation. The combination of motion estimation and motion compensation is a key part of video compression as used by MPEG 1, 2 and 4 as well as many other video codecs.

Motion estimation based video compression helps in saving bits by sending encoded difference images which have inherently less entropy as opposed to sending a fully coded frame. However, the most computationally expensive and resource extensive operation in the entire compression process is motion estimation. Hence, fast and computationally inexpensive algorithms for motion estimation is a need for video compression.

A metric for matching a macroblock with another block is based on a cost function. The most popular in terms of computational expense is: