Architecture for enhancing the compression (e.g., luma, chroma) of a video signal and improving the perceptual quality of the video compression schemes. The architecture operates to reshape the normal multimodal energy distribution of the input video signal to a new energy distribution. In the context of luma, the algorithm maps the black and white (or contrast) information of a picture to a new energy distribution. For example, the contrast can be enhanced in the middle range of the luma spectrum, thereby improving the contrast between a light foreground object and a dark background. At the same time, the algorithm reduces the bit-rate requirements at a particular quantization step size. The algorithm can be utilized also in post-processing to improve the quality of decoded video.