This paper proposes a greyscale pre-processing and robust video watermarking algorithm for the copyright protection application in the emerging video coding standard H.264/AVC. The watermark is first transformed by a Hadamard transform and modified to accommodate the H.264/AVC computational constraints before it is inserted into video data in the compressed domain. This approach leads to good robustness and high capacity of embedding by maintaining good visual quality of the watermarked sequences. The experimental results prove the capability to embed the watermark in short video sequences and the effectiveness of the algorithm against some attacks such as re-compression by the H.264 codec, transcoding, and some common processing.