CODEC stands for "compression/decompression."

A 150 MB video might be reduced to 15 MB using a codec.

• Codecs are used to minimize the storage space required for audio and video by compression. 
• A codec encodes a data stream for transmission, storage, or encryption, or decodes it for playback or editing.
• Codecs are used in videoconferencing, streaming media, and video editing applications.

Applications
MP3 audio codec converts analog audio signals into digital signals for transmission or storage. A receiving device then converts the digital signals back to analog using an audio decompressor, for playback. An example of this is the codecs used in the sound cards of personal computers. A video codec accomplishes the same task for video signals.

CODEC Hardware : HDMI over IP Encoder / Decoder

Uncompressed PCM audio (.wav or .aiff file) - > modern compressed formats Mp3 and Opus .

Video codecs are MP4 , Ogg, ASF, QuickTime, RealMedia, and DivX.

Software CODECs