Abstract: Panoramic videos are a 360 degree representation of a certain scene. The users can navigate interactively through the scene and change their view angles. Panoramic videos are often high-resolution and consume a significant amount of bandwidth for transmission. To resolve the problem, tile-based panoramic video coding and transmission is applied in some systems. With tile-based panoramic video coding and transmission, only the tiles involved with the perspective view are transmitted and decoded. Different tile sizes will bring different transmission bit rates for same video quality. In this paper, a two path coding method with H.264/AVC for cylinder panoramic video based on a hyperbolic model is proposed. With this method, the most efficient tile size can be selected and users can build the same quality perspective view with the smallest transmission bit rate.