Video Formats Introduction
Windows Media Video.
Formerly known as .ASF file format from Microsoft.
A .WMV file includes a video stream (compressed using MS MPEG4 or WMV1 codec) combined with WMA encoded audio stream. The file format is proprietary and backward incompatible. Currently, dedicated to slow dialup connections, this media format does not allow even sub-VHS video quality due to blurred picture. WMA audio quality, compared to MPEG Layer3 of the same bitrate, isn't better either.
You may wish to use Windows Media format to create smallest files that are suitable to send by e-mail, however you must keep in mind that .WMV file works like "one way ticket" - once created, it can't be edited anymore, without horrific quality loss. As opposite, AVI files compressed with MPEG4 video codec are still editable and often it is possible to retain source video quality.
(MPEG-1, MPEG-2 Video)
MPEG is both a file format and a codec for digital video. There are actually three forms of MPEG: MPEG video, for picture only; MPEG audio, which is discussed in the previous section; and MPEG systems, which includes both audio and video tracks.
MPEG files provide excellent picture quality but can be very slow to decompress. For this reason, many MPEG decoding systems are hardware-assisted, meaning that you need a board to play MPEG files reliably without dropping a lot of frames. Although software decoders definitely exist (and there are some very good ones out there), they tend to require a lot of processor power on your system and also usually support MPEG video only (they have no soundtrack).
A third drawback of MPEG video as a standard for the Web is that MPEG movies are very expensive to encode. You need a hardware encoder to do so, and the price ranges for encoders are in the thousands of dollars. As MPEG becomes more popular, those prices are likely to drop. But for now, unless you already have access to the encoding equipment or you're really serious about your digital video, a software-based format is probably the better way to go.