Video coding standards, such as H.264/MPEG-4 AVC, have adopted the hybrid codec paradigm that consists of intra and inter prediction, followed by transform and quantization of the prediction residual. Inter prediction uses block-based motion compensation (BMC) to predict samples in the current picture. BMC, however, suffers from blocking artifacts and discontinuities. Along with deblocking, overlapped block motion compensation (OBMC) has been proposed in the past, primarily to suppress blocking artifacts. However, issues that include decoding complexity and implementation have been impediments to practical applications of OBMC. Here¹, we propose a new decoder- and encoder-friendly architecture for inter prediction with OBMC. Furthermore, we show preliminary experimental results that point to coding efficiency gains over the BMC architecture of H.264/MPEG-4 AVC.