High dynamic range (HDR) video compression has until now been approached by using the high profile of existing state-of-the-art H.264/AVC (Advanced Video Coding) codec or by separately encoding low dynamic range (LDR) video and the residue resulted from the estimation of HDR video from LDR video. Although the latter approach has a distinctive advantage of providing backward compatibility to 8-bit LDR displays, the superiority of one approach to the other in terms of the rate distortion trade-off has not been verified yet. In this paper, we first give a detailed overview of the methods in these two approaches. Then, we experimentally compare two approaches with respect to different objective and perceptual metrics, such as HDR mean square error (HDR MSE), perceptually uniform peak signal to noise ratio (PU PSNR) and HDR visible difference predictor (HDR VDP). We first conclude that the optimized methods for backward compatibility to 8-bit LDR displays are superior to the method designed for high profile encoder both for 8-bit and 12-bit mappings in terms of all metrics. Second, using higher bit-depths with a high profile encoder is giving better rate-distortion performances than employing an 8-bit mapping with an 8-bit encoder for the same method, in particular when the dynamic range of the video sequence is high. Third, rather than encoding of the residue signal in backward compatible methods, changing the quantization step size of the LDR layer encoder would be sufficient to achieve a
required quality. In other words, the quality of tone mapping is more important than residue encoding for the performance of HDR image and video coding.