Hybrid predictive/transform coding is studied. The usual formulation is to first apply a unitary transform and then code the transform coefficients with independent DPCM coders, i.e., the prediction is performed in the transform domain. This structure is compared to spatial domain prediction, where a difference signal is formed in the spatial domain and then coded by a transform coder. A linear spatial domain predictor which minimizes the mean square prediction error also minimizes the mean square of each transform coefficient. The two structures are equivalent if the transform domain prediction scheme is extended to a more general predictor. Hence, the structure that gives the easiest implementation can be chosen. The spatial domain structure is preferred for motion compensation and for line interlaced video signals. Interframe hybrid coding experiments are performed on interlaced videophone scenes using an adaptive transform coder. Motion compensation gives a rate reduction of 25-35 percent compared to frame difference prediction with the same mean square error. The subjective advantage is even greater, since the "dirty window" effect is not present with motion compensation. It is important to perform the motion estimation with fractional pel accuracy. Field coding with a switched predictor using previous field in moving areas is an interesting alternative to frame coding with frame difference prediction.