From copyright protection to error concealment, video data hiding has found usage in a great number of applications. Recently proposed applications such as privacy data preservation require huge amount of information to be hidden inside a compressed video bitstream. Since data hiding disturbs the underlying statistical patterns of the source data, it adversely affects the performance of compression which are designed based on the statistical properties of the data. As such, it is imperative to

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... esign a data hiding scheme that is compatible with the compression algorithm and at the same time, introduces as little perceptual distortion as possible. In this paper, we propose a novel compression-domain video data-hiding algorithm that determines the optimal embedding strategy to minimize both the output perceptual distortion and the output bit rate. The hidden data is embedded into selective Discrete Cosine Transform (DCT) coefficients which are found in most video compression standards. The coefficients are selected based on minimizing a cost function that combines both distortion and bit rate via a usercontrolled weighting. Two methods are proposed -exhaustive search and fast Lagrangian approximation. While the former produces optimal results, the latter approach is significantly faster and amenable to real-time implementation.