Book excerpt: Abstract: "We present a statistical model-based video segmentation algorithm for typical videophone and videoconference applications. This algorithm makes use of online information and tries to build statistical models for both background and foreground and update the models on the fly. A hierarchical system structure is designed and segmentation is combined with tracking. Two possible applications are discussed: to generate VOP for MPEG-4 and to introduce subjective rate control for DCT-based algorithms. A R-D based rate control algorithm for H.263 is proposed and implemented as an example."