Yes AVC is definitely tougher to encode (roughly 8x/4x the power needed for encode/decode versus MPEG2) there is no free lunch if AVC is used on a disc the processors involved will have to have enough power to handle the extra crunch.
Here's a great explanation of why
http://www.tvtechnology.com/features/news/n_AVC.shtml
Quote:
"AVC is more complex and may ultimately offer the potential for higher quality and more efficient coding. VC-1 is less complex and therefore, presumably easier to implement efficiently," Goldman said.
Examples of specific differences between AVC and VC-1 include AVC's use of six-tap filters versus VC-1's use of four-tap filters. AVC uses an entropy scheme known as CABAC (context-adaptive binary arithmetic coding) that is computationally intensive and therefore expensive to implement. VC-1, by contrast, uses high-order entropy coding that is less complex and less expensive to implement.
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http://broadcastengineering.com/mag/...avc/index.html
Quote:
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Practical AVC encoding and decoding solutions must overcome substantial technical challenges. SD AVC compression requires around 10 times more processing power than MPEG-2, and there is now a dearth of ready-made silicon solutions for professional AVC compression applications. HD encoding compounds the challenge.
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VC-1 seems to be the easier codec to master discs to from what I've seen but I think that in the next 5 years we'll see AVC pull forward in the quality department. I expect Sony to be more of a AVC proponent. Hell they may be in the patent pool for AVC.