I'm confused why it's encrypted as a JPEG image per frame instead of one AES encrypted video file. Since the same AES key is used for each frame it wouldn't add any additional security imo
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JPEG 2000 has some interesting properties for very high quality video storage and transport where bandwidth is not a concern. The traditional encoded video formats we know are less preferred at this scale.
JPEG 2000 is resource intensive, though. The decoding hardware is probably either GPU based or using an FPGA implantation from one of the providers who makes hardware for this.