Technically thats true (well...as far as I understand avi isnt compressed...its a wrapper for stills). But TMPGENC will do a fantastic job of avi to mpeg for your tv...and lets face it....were probably talking of mpeg2 for TV use. I have used it in the past for my DV camera...the TV/DVD mpeg quality is superb. The only problem its REALLY slow to convert. These days I capture straight to MPEG2 from my camera or my TV capture card with nice crisp results using Mysonic DVD...its good...chapter creation...much easier..then straight onto DVDR. The point with good quality avi's...they are massive files and much more than you need. Hope that helps.
/edit TMPGENC comes in two flavours...free and pay. Free lets you do MPEG1 for VCD (which is ok). MPEG2 is, I believe, pay and theres an additional codec incolved.
AVI most certainly is compressed in almost all cases. While it does support uncompressed video, the size of such is too large to be used, ever. Consider a 640x480 video requires 23mb/s uncompressed and you begin to see why it's not common.
By and large, AVIs are compressed with divx, xvid, or one of the wmv codecs these days. Often with mp3 stereo sound or AC3.
The form of loss depends on the codec, but transcoding between lossy formats can lead to huge degradation of data - the effective loss is compounded further with every format or bitrate change. This is something we tackle every day at work, and as a result have had to archive all masters of media onto a SeaChange from these guys at 50Mbit. Encoders aren't clever enough to spot the effects of a previous compression - they'll see the borders to artifacting for instance and re-encode them as valid detail in the produced streams.
It's one of the reasons Quicktime can't handle really noisy old archive video, the video server sees the grain and noise as detail and tries to encode the lot.
You can minimise the effects of transcoding with a video filter, but they're not the kind of thing a home user could operate, let alone afford.
For lower end lossless video storage, assuming you have a lot of disk space, try the huffyuv codec - it's basically huffman codes (what zip et al are based on) for video. It's lossless for YUV sources (i.e. cameras) and almost lossless for RGB (only loss is the RGB->YUV conversion). File sizes are roughly 1/3 of uncompressed, depending on your source material.
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