This paper describes a novel video coding scheme that can be considered as a generalization of the block-based hybrid video coding approach of H.264/AVC. While the individual building blocks of our approach are kept simple similarly as in H.264/AVC, the flexibility of the block partitioning for prediction and transform coding has been substantially increased. This is achieved by the use of nested and pre-configurable quadtree structures, such that the block partitioning for temporal and spatial prediction as well as the space-frequency resolution of the corresponding prediction residual can be adapted to the given video signal in a highly flexible way. In addition, techniques for an improved motion representation as well as a novel entropy coding concept are included. The presented video codec was submitted to a Call for Proposals of ITU-T VCEG and ISO/IEC MPEG and was ranked among the five best performing proposals, both in terms of subjective and objective quality.