A controller for allocating a bit budget for a current P- frame in a current group of pictures of a first compression-encoded digital video signal, comprising: means for determining a nominal bit budget for a current P-frame, BB, in accordance with a first equation when the current P-frame involves a scene change and in accordance with a second equation, different from the first equation, when the current P-frame does not involve a scene change, wherein the first equation is: BB P = RB c B c P / c B c P + RN P − 1 c I c B + RN B c I c P; the second equation is: BB P = RB c B / RN P c B + RN B c P; RB is a number of remaining available bits for the current group of pictures; c, c, and c are frame coefficients for I-frames, P-frames, and B-frames in the group of pictures respectively, the frame coefficients being proportional to the inverse of the frame complexity when the current P-frame does not involve a scene change and the frame coefficients are reset at the point of a scene change; and RN P and RN B are a number of P-frames and B-frames remaining in the current group of pictures respectively; and means for modifying the nominal bit budget for the P-frame by multiplying the nominal bit budget for the current P-frame by a scale factor, which is selected in accordance with whether or not a pending scene change within the current group of pictures beyond the current P-frame has been detected. means for determining a nominal bit budget for a current P-frame, BB, in accordance with a first equation when the current P-frame involves a scene change and in accordance with a second equation, different from the first equation, when the current P-frame does not involve a scene change, wherein the first equation is: BB P = RB c B c P / c B c P + RN P − 1 c I c B + RN B c I c P; the second equation is: BB P = RB c B / RN P c B + RN B c P; RB is a number of remaining available bits for the current group of pictures; c, c, and c are frame coefficients for I-frames, P-frames, and B-frames in the group of pictures respectively, the frame coefficients being proportional to the inverse of the frame complexity when the current P-frame does not involve a scene change and the frame coefficients are reset at the point of a scene change; and RN P and RN B are a number of P-frames and B-frames remaining in the current group of pictures respectively; and means for modifying the nominal bit budget for the P-frame by multiplying the nominal bit budget for the current P-frame by a scale factor, which is selected in accordance with whether or not a pending scene change within the current group of pictures beyond the current P-frame has been detected. RB is a number of remaining available bits for the current group of pictures; c, c, and c are frame coefficients for I-frames, P-frames, and B-frames in the group of pictures respectively, the frame coefficients being proportional to the inverse of the frame complexity when the current P-frame does not involve a scene change and the frame coefficients are reset at the point of a scene change; and RN P and RN B are a number of P-frames and B-frames remaining in the current group of pictures respectively; and means for modifying the nominal bit budget for the P-frame by multiplying the nominal bit budget for the current P-frame by a scale factor, which is selected in accordance with whether or not a pending scene change within the current group of pictures beyond the current P-frame has been detected.