Fractal image compression is a relatively recent image compression method. Its extension to a sequence of motion images is important in video compression applications. There are two basic fractal compression methods, namely the cube-based and the frame-based methods, being commonly used in the industry. However there are advantages and disadvantages in both methods. This paper proposes a hybrid algorithm highlighting the advantages of the two methods in order to produce a good compression algorithm for video industry. Experimental results show the hybrid algorithm improves the compression ratio and the quality of decompressed images