Transcoding is the process of converting digital media files from one format to another. This is often necessary to ensure compatibility with different devices or software. For example, a video file in the AVI format may need to be transcoded to MP4 to be played on a smartphone. The transcoding process can involve changing the file's codec, resolution, or bitrate, which affects the quality and size of the final output. It is commonly used in streaming services, where content must be optimized for various internet speeds and device capabilities, ensuring a smooth viewing experience for users.