A method and system reduces the spatial resolution of a compressed
bitstream of a sequence of frames of a video signal by first decoding the
frames, and storing the decoded frames in a first frame buffer. While
performing the decoding, motion compensating is performed with full
resolution motion vectors of the stored decoded frames. The decoded
frames are then down-sampled to a reduced resolution, and stored in a
second frame buffer. The reduced resolution frames are partially encoded
to produce a reduced resolution compressed bitstream of the video. While
performing the partial encoding, motion compensation is performed with
reduced resolution motion vectors of the stored reduced resolution
frames.