This paper discusses the efficiency of a compression scheme for video sequences that jointly encodes groups of pictures. Our approach, motion-compensated transform coding, applies a KLT to decorrelate a set of motion-compensated pictures for efficient encoding. The theoretical investigation utilizes a signal model for inaccurate motion compensation and provides a performance comparison to motion-compensated prediction. We discuss the influence of motion accuracy, residual noise, and the correlation of displacement errors dependent on the number of coded pictures.