Consumers judged the quality of video images that had been compressed by an MPEG2 codec at the bit rates 3.0, 3.9, 5.3, and 8.3 Mb/s. The judgments were made in a standard testing laboratory. VHS and simulated cable analog systems also processed the same scenes for comparison. This study asked: 1. At what bit rate does MPEG2 video equal or exceed the quality of competing technologies such as cable TV and VHS? Answer: 3 Mb/s. 2. How much more are consumers willing to pay for MPEG2 compared to what they currently pay for cable TV? Answer: $1-$2. The answers to both questions come with many caveats. Further results: MPEG2 was rated higher than MPEG1 at the same bit rate, even without the use of ''B frames.'' The rating difference was about a dollar. MPEG2 at 3.0 Mb/s is rated the same as MPEG1 at 3.9 Mb/s. Subjective quality improves only slowly as bit rate increases from 3.0 to 8.3 Mb/s. MPEG2, at 8.3 Mb/s was rated the same as the original, uncompressed signal. Individual test scenes were rated differently, independent of the coding system.