The principle of MPEG2 is relatively simple. Figure 1 on the right shows how each frame of a movie is stored using MPEG2. Instead of storing each frame of a movie, MPEG2 stores the transitional changes between each frame. It starts with a key frame. Every frames after the key frame are the changes between each frame. Periodically, a new key frame will be generated; in case there's a bad spot on the DVD or the DVD drive skips a track during playback.

To decode the changes between each frame requires a great deal of processor time. Only a system with an AGP video card equipped a Pentium II/333MHz or faster processor is capable of performing the decoding without losing any frames. Alternatively, a dedicated MPEG2 decoder card may be added to the system.

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