The forward transform and quantization components of the video encoders described herein may modify the quantization typically performed by video encoders to reduce quantization artifacts. For example, for a given pixel in an image macroblock, noise may be generated based on information about pixels in the neighborhood of the given pixel (e.g., DC transform coefficients or quantization errors of the neighbor pixels and corresponding programmable weighting coefficient values for the neighbor pixels) and this noise may be added to the DC transform coefficient for the given pixel prior to performing quantization. The weighting coefficient values may be chosen to shape the noise added to the DC transform coefficient values (e.g., to apply a filter operation). When applied to a chroma component of an image frame, this neighbor-data-based dithering approach may reduce color banding artifacts. When applied to the luma component, it may reduce blocking artifacts.