The advanced video codec (AVC) standard, recently defined by a joint video team (JVT) of ITU-T and ISO/IEC, is introduced in this paper together with its performance and complexity co-evaluation. While the basic framework is similar to the motion-compensated hybrid scheme of previous video coding standards, additional tools improve the compression efficiency at the expense of an increased implementation cost. As a first step to bridge the gap between the algorithmic design of a complex multimedia system and its cost-effective realization, a high-level co-evaluation approach is proposed and applied to a real-life AVC design. An exhaustive analysis of the codec compression efficiency versus complexity (memory and computational costs) project space is carried out at the early algorithmic design phase. If all new coding features are used, the improved AVC compression efficiency (up to 50% compared to current video coding technology) comes with a complexity increase of a factor 2 for the decoder and larger than one order of magnitude for the encoder. This represents a challenge for resource-constrained multimedia systems such as wireless devices or high-volume consumer electronics. The analysis also highlights important properties of the AVC framework allowing for complexity reduction at the high system level: when combining the new coding features, the implementation complexity accumulates, while the global compression efficiency saturates. Thus, a proper use of the AVC tools maintains the same performance as the most complex configuration while considerably reducing complexity. The reported results provide inputs to assist the profile definition in the standard, highlight the AVC bottlenecks, and select optimal trade-offs between algorithmic performance and complexity.