MPEG is the international standard for encoding and compressing video images, while AAC stands for Advanced Audio Coding. MPEG and AAC are two encoding algorithms that are used in a lot of top boxes and portable devices. AAC is simply an extension of the MPEG standard. MPEG is used in many applications. It is used in encoding video files such as movies and clips to a digital format.
AAC is only used when encoding sound files only. It has been an application for MP3’s, which is another MPEG standard format that has been successfully used in portable music devices. AAC is superior regarding sound quality. Even though AAC is for sound only, it is also used often in encoding the audio component of the video clip.
When it comes to the market vision, MPEG is still number one, especially in portable media players, which is convenient since not many devices support the AAC format, which is rumored to change within the next few years. However, Apple uses AAC as the default file format for their popular music player. It has been said the AAC in terms of function and quality will far surpass that of the MPEG.