Encoder Options for MKV Files

Video Compressor

MKV files are saved using H264 or MPEG4 compression.

H264 compressor

Quality

The image reproduction quality level. Best gives an output video with the maximum quality of reproduction resulting in the biggest file size. Least gives minimum quality of reproduction with the smallest file size. This is only available for the internal encoder.

Average Bit Rate

Enable this option to indicate the long-term desired average data rate (in kilobits per second). A higher value results in better image quality but bigger file size. Note that this is not a hard limit: the resulting data rate could be lower or higher depending on the video size and actual contents. If this option is disabled then the encoder does not set a limit, and the Quality setting, if enabled, should determine the file size.

Video Bitrate - MPEG4 compressor

Here you specify the bitrate the video is encoded at. The higher the value, the better the quality of the picture and the less artifacts (macro blocks and blurring). You should experiment with this. Please note higher values result in a larger file size.
Average bitrate is the mean bit rate, and is the main value that affects quality. Maximum bitrate should generally exceed this, but no set margin is required; the Average and Maximum bitrate can safely be the same.
Maximum bitrate is the absolute maximum. It does not majorly affect quality but some formats have set values that must not be exceeded (e.g. 10 megabits for DVD video). Sometimes if your maximum bitrate is too low then you will get macro block effects, in which case you should increase BOTH values.

Audio Compressor

MKV files are saved using AAC compression for sound.

Audio Bitrate

You can specify a variety of bitrates the sound will be encoded at. The higher the value the better the quality of sound.