We investigate the implications of the conventional "t+2D" MC 3D-DWT structure for spatial scalability, and propose a more exible "2D+t+2D" structure. An initial levels of spatial wavelet decomposition are followed by levels of motion compensated temporal decomposition, applied separately to each spatial resolution level. A further ? levels of spatial decomposition are applied to the resulting subbands. By adjusting , the structure allows us to trade energy compaction with the potential for artifacts at reduced spatial resolutions. This allows us to study the interaction between scalability and compression efciency. We show that the "t+2D" structure ( = 0) necessarily maximizes compression efciency, while allowing misaligned spatial aliasing artifacts to arise at reduced resolutions. These artifacts can be removed by increasing the value of , at an inevitable cost in compression efciency. We show how this cost can be minimized.