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MPEG4: was introduced in 1998 as the next generation of file compression for delivering audio & video over a wide range of bandwidths.  It achieves this by compressing data to form small bits that can be transmitted and than decompressed for viewing.  It stores and transmits only the changes from one frame to the next, instead of each frame however the amount of data that is removed is not noticed by the human eye.

H.264: is now the newest generation of audio & video compression format which allows transmission of higher quality video at a lower bit rate using the same bandwidth.  It provides the latest in advanced video encoding and decoding technologies delivering smaller file sizes, higher performance, solid reliability and longer recording times over previous standards. H.264 file compression reduces the file size and therefore requires less space on a hard drive or server than MPEG4.  Higher image quality than MPEG4. H.264 is the most efficient codec available in a Standalone DVR. 30% more storage and higher quality video than MPEG4 format. Enjoy the smooth video quality both locally and remotely through the Internet. Easy to use interface and extreme reliability.

In selecting a DVR, you should make sure it uses H.264 video compression.