We can use reference frames from the stored frame in the memory, but we generate reference frame at both the encoder and decoder side because decoder don't has information about input frame, it only has information of bitstream.
I have two doubts related to reference frame generation (see attached block diagram):
1. How can frame store give output as reference frame (previous or next), because it is taking input as (residual error+predicted frame), So it should give current (input) frame as output.
2. While computing the reference frame, we don't have predicted frame value. Then how can we use it for reference frame computation?
Reference frame is the result od decoding procedure. Usually it is available in decoding buffer
Sandeep, the reference frame is the previously decoded frame. This is because one has to reconstruct the frames in the decoder. So, the reference frame is the decoded frame at instant i-1 where i is the instant or current frame. It is stored in the reference frame memory as evident in your block diagram. It is constructed from the its previous frame at the instant i-2 by adding the reference frame at the instant i-2 to the decoded residual frame at the instant i-1. It is so that every video encoder contains a video decoder to reconstruct the reference frames as apparent in the block diagram.
Best wishes
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