Occurrence of mosquito noise of a macro block that contains even a small plain region is suppressed. One macro block is subdivided into sub blocks each of which is composed of four pixels×four lines. The average value of luminance levels of each sub block is calculated. The absolute values of the difference values between the luminance levels and the average value are obtained for each sub block. The minimum value of the average difference values of the 16 sub blocks of one macro block is selected and decided as an activity of the macro block. Corresponding to the decided activity, a quantizer scale of the macro block is decided. With the decided quantizer scale, the macro block is quantized. According to this method, since the size of each sub block is smaller than the size of a conventional sub block of eight pixels×eight lines, the average difference value of each sub block is more emphasized. Since the minimum value of the average difference values is designated as an activity of the macro block, an activity of a macro block that contains even a small plain portion can be more suppressed. As a result, a quantizer value of a macro block that contains an edge can be decreased. Thus, mosquito noise of a macro block that contains an edge portion of a picture can be suppressed.