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What is H.264 format:
H.264 is a new video codec standard which can achieve high quality video in relatively low bitrates. You can think it as the “successor” of the existing formats (MPEG2, MPEG4, DivX, XviD, etc.) as it aims in offering similar video quality in half the size of the formats mentioned before. Also known as AVC (Advanced Video Coding, MPEG-4 Part 10), H.264 is actually defined in an identical pair of standards maintained by different organizations, together known as the Joint Video Team (JVT). While MPEG-4 Part 10 is an ISO/IEC standard, it was developed in cooperation with the ITU, an organization heavily involved in broadcast television standards. Since the ITU designation for the standard is H.264, you may see MPEG-4 Part 10 video referred to as either AVC or H.264. Both are valid, and refer to the same standard.
The latest version of ffdshow supports H264 playback. Pleaseremember, ffdshow is a DirectShow filter so after you install it you'll be able to play H264 in most video players you already have installed, including Windows Media Player. Alternatively you can download VLC player. It can play H.264 without need of any codec or DirectShow filter. Apple QuickTime players support H264 too, but their support is not so great for all formats, so don't use them for general H264 playback. Generally most players or codec packs nowadays include H264 support so you shouldn't have any problems. You may also watch your H.264 files on your Xbox 360 and PS3 with smooth playback.
You may come across all kind of file extensions and still the codec can be H.264:
*.avi - People also use .avi for H264 videos too!
*.mp4 - QuickTime use this format. Better than AVI as you can store AAC audio as well.
*.m4v - The standard file format for videos for iPods developed by Apple.
*.mkv - Matroska container - can support many video and audio formats.
- Source from: http://www.winxdvd.com/resource/h264.htm
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Additional Source (wikipedia): http://en.wikipedia.org/wiki/H.264/MPEG-4_AVC
