This invention presents a scalable solution to encode the whole 12-bit raw video once to generate one bitstream that contains an H.264/AVC compatible base layer and a scalable enhancement layer. If an H.264/AVC decoder is available at the client end, only the base layer sub-bitstream is decoded and the decoded 8-bit video can be viewed on a conventional 8-bit display device; if the color bit depth scalable decoder is available at the client end, both the base layer and the enhancement layer sub-bitstreams will be decoded to obtain the 12-bit video and it can be viewed on a high quality display device that supports more than eight bit.