Abstract: A system and method disposed to enable real-time creation and manipulation of digital media within a conventional personal computer environment without dedicated hardware assistance is disclosed herein. In particular, one disclosed method is directed to generating a compressed video output signal using a computing device. The method includes decoding a previously compressed first digital video bit stream to obtain a first decoded digital video signal. The first decoded digital video signal is mixed with a second digital video signal in order to produce a mixed video signal. In addition, the mixed video signal is recompressed so as to form the compressed video output signal wherein the mixing and recompressing are performed by the computing device in substantially in real-time.