A new block matching criterion for motion estimation in video coding that will give better encoded video quality than the commonly used sum of absolute differences (SAD) or even sum of squared differences (SSD) criteria is presented. The new criterion tends to concentrate the discrete cosine transformed block energy into DC frequency which may allow coding the AC coefficients with less bits. The criterion gives best results on sequences which have varying lighting conditions. Furthermore, we modify the successive elimination algorithm (SEA) and multilevel successive elimination algorithm (MSEA) to be usable with the new criterion by deriving a new tighter lower bound for the SSD criterion. The new bound can be used either directly with the SSD criterion or with the new bit-rate minimizing criterion.