There are two broad meanings: 1. a CODEC refers to integrated circuits that perform data conversion. It is an acronym for "coder/decoder" facilitating analog-to-digital conversion (and vice-versa). 2 a CODEC is an algorithm, or specialized computer program, that reduces the number of bytes consumed by large files and programs. To reduce the amount of storage space for a video file, you compress it. There are lots of CODEC packages - including big names like QuickTime, Netmeeting and so on.