Explanation
Gamma encoding of images is required to compensate for properties of human vision, to maximize the use of the bits or bandwidth relative to how humans perceive light and color. Human vision under common illumination conditions (not pitch black or blindingly bright) follows an approximate gamma or power function. If images are not gamma encoded, they allocate too many bits or too much bandwidth to highlights that humans cannot differentiate, and too few bits/bandwidth to shadow values that humans are sensitive to and would require more bits/bandwidth to maintain the same visual quality. Gamma encoding of floating point images is not required (and may be counterproductive) because the floating point format already provides a pseudo-logarithmic encoding.
A common misconception is that gamma encoding was developed to compensate for the input–output characteristic of cathode ray tube (CRT) displays. In CRT displays the electron-gun current, and thus light intensity, varies nonlinearly with the applied anode voltage. Altering the input signal by gamma compression can cancel this nonlinearity, such that the output picture has the intended luminance. However, the gamma characteristics of the display device do not play a factor in the gamma encoding of images and video — they need gamma encoding to maximize the visual quality of the signal, regardless of the gamma characteristics of the display device. The similarity of CRT physics to the inverse of gamma encoding needed for video transmission was a combination of luck and engineering which simplified the electronics in early television sets.
Read more about this topic: Gamma Correction
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