diff --git a/client/ayon_core/plugins/publish/extract_otio_review.py b/client/ayon_core/plugins/publish/extract_otio_review.py
index 7a9a020ff0..f217be551c 100644
--- a/client/ayon_core/plugins/publish/extract_otio_review.py
+++ b/client/ayon_core/plugins/publish/extract_otio_review.py
@@ -54,7 +54,7 @@ class ExtractOTIOReview(
     # plugin default attributes
     to_width = 1280
     to_height = 720
-    output_ext = ".jpg"
+    output_ext = ".png"
 
     def process(self, instance):
         # Not all hosts can import these modules.
@@ -510,6 +510,12 @@ class ExtractOTIOReview(
                 "-tune", "stillimage"
             ])
 
+        if video or sequence:
+            command.extend([
+                "-vf", f"scale={self.to_width}:{self.to_height}:flags=lanczos",
+                "-compression_level", "5",
+            ])
+
         # add output attributes
         command.extend([
             "-start_number", str(out_frame_start)
@@ -520,9 +526,10 @@ class ExtractOTIOReview(
             input_extension
             and self.output_ext == input_extension
         ):
-            command.extend([
-                "-c", "copy"
-            ])
+            command.extend(["-c", "copy"])
+        else:
+            # For lossy formats, force re-encode
+            command.extend(["-pix_fmt", "rgba"])
 
         # add output path at the end
         command.append(output_path)
diff --git a/tests/client/ayon_core/pipeline/editorial/test_extract_otio_review.py b/tests/client/ayon_core/pipeline/editorial/test_extract_otio_review.py
index 45191a2c53..6a74df7f43 100644
--- a/tests/client/ayon_core/pipeline/editorial/test_extract_otio_review.py
+++ b/tests/client/ayon_core/pipeline/editorial/test_extract_otio_review.py
@@ -103,17 +103,18 @@ def test_image_sequence_with_embedded_tc_and_handles_out_of_range():
         # 10 head black handles generated from gap (991-1000)
         "/path/to/ffmpeg -t 0.4166666666666667 -r 24.0 -f lavfi -i "
         "color=c=black:s=1280x720 -tune stillimage -start_number 991 "
-        "C:/result/output.%04d.jpg",
+        "-pix_fmt rgba C:/result/output.%04d.png",
 
         # 10 tail black handles generated from gap (1102-1111)
         "/path/to/ffmpeg -t 0.4166666666666667 -r 24.0 -f lavfi -i "
         "color=c=black:s=1280x720 -tune stillimage -start_number 1102 "
-        "C:/result/output.%04d.jpg",
+        "-pix_fmt rgba C:/result/output.%04d.png",
 
         # Report from source exr (1001-1101) with enforce framerate
         "/path/to/ffmpeg -start_number 1000 -framerate 24.0 -i "
-        f"C:\\exr_embedded_tc{os.sep}output.%04d.exr -start_number 1001 "
-        "C:/result/output.%04d.jpg"
+        f"C:\\exr_embedded_tc{os.sep}output.%04d.exr "
+        "-vf scale=1280:720:flags=lanczos -compression_level 5 "
+        "-start_number 1001 -pix_fmt rgba C:/result/output.%04d.png"
     ]
 
     assert calls == expected
@@ -130,20 +131,23 @@ def test_image_sequence_and_handles_out_of_range():
 
     expected = [
         # 5 head black frames generated from gap (991-995)
-        "/path/to/ffmpeg -t 0.2 -r 25.0 -f lavfi -i color=c=black:s=1280x720"
-        " -tune stillimage -start_number 991 C:/result/output.%04d.jpg",
+        "/path/to/ffmpeg -t 0.2 -r 25.0 -f lavfi -i color=c=black:s=1280x720 "
+        "-tune stillimage -start_number 991 -pix_fmt rgba "
+        "C:/result/output.%04d.png",
 
         # 9 tail back frames generated from gap (1097-1105)
-        "/path/to/ffmpeg -t 0.36 -r 25.0 -f lavfi -i color=c=black:s=1280x720"
-        " -tune stillimage -start_number 1097 C:/result/output.%04d.jpg",
+        "/path/to/ffmpeg -t 0.36 -r 25.0 -f lavfi -i color=c=black:s=1280x720 "
+        "-tune stillimage -start_number 1097 -pix_fmt rgba "
+        "C:/result/output.%04d.png",
 
         # Report from source tiff (996-1096)
         # 996-1000 = additional 5 head frames
         # 1001-1095 = source range conformed to 25fps
         # 1096-1096 = additional 1 tail frames
         "/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i "
-        f"C:\\tif_seq{os.sep}output.%04d.tif -start_number 996"
-        f" C:/result/output.%04d.jpg"
+        f"C:\\tif_seq{os.sep}output.%04d.tif "
+        "-vf scale=1280:720:flags=lanczos -compression_level 5 "
+        "-start_number 996 -pix_fmt rgba C:/result/output.%04d.png"
     ]
 
     assert calls == expected
@@ -163,8 +167,9 @@ def test_movie_with_embedded_tc_no_gap_handles():
         # - first_frame = 14 src - 10 (head tail) = frame 4 = 0.1666s
         # - duration = 68fr (source) + 20fr (handles) = 88frames = 3.666s
         "/path/to/ffmpeg -ss 0.16666666666666666 -t 3.6666666666666665 "
-        "-i C:\\data\\qt_embedded_tc.mov -start_number 991 "
-        "C:/result/output.%04d.jpg"
+        "-i C:\\data\\qt_embedded_tc.mov -vf scale=1280:720:flags=lanczos "
+        "-compression_level 5 -start_number 991 -pix_fmt rgba "
+        "C:/result/output.%04d.png"
     ]
 
     assert calls == expected
@@ -181,12 +186,14 @@ def test_short_movie_head_gap_handles():
     expected = [
         # 10 head black frames generated from gap (991-1000)
         "/path/to/ffmpeg -t 0.4 -r 25.0 -f lavfi -i color=c=black:s=1280x720"
-        " -tune stillimage -start_number 991 C:/result/output.%04d.jpg",
+        " -tune stillimage -start_number 991 -pix_fmt rgba "
+        "C:/result/output.%04d.png",
 
         # source range + 10 tail frames
         # duration = 50fr (source) + 10fr (tail handle) = 60 fr = 2.4s
-        "/path/to/ffmpeg -ss 0.0 -t 2.4 -i C:\\data\\movie.mp4"
-        " -start_number 1001 C:/result/output.%04d.jpg"
+        "/path/to/ffmpeg -ss 0.0 -t 2.4 -i C:\\data\\movie.mp4 -vf "
+        "scale=1280:720:flags=lanczos -compression_level 5 "
+        "-start_number 1001 -pix_fmt rgba C:/result/output.%04d.png"
     ]
 
     assert calls == expected
@@ -204,13 +211,14 @@ def test_short_movie_tail_gap_handles():
         # 10 tail black frames generated from gap (1067-1076)
         "/path/to/ffmpeg -t 0.4166666666666667 -r 24.0 -f lavfi -i "
         "color=c=black:s=1280x720 -tune stillimage -start_number 1067 "
-        "C:/result/output.%04d.jpg",
+        "-pix_fmt rgba C:/result/output.%04d.png",
 
         # 10 head frames + source range
         # duration = 10fr (head handle) + 66fr (source) = 76fr = 3.16s
         "/path/to/ffmpeg -ss 1.0416666666666667 -t 3.1666666666666665 -i "
-        "C:\\data\\qt_no_tc_24fps.mov -start_number 991"
-        " C:/result/output.%04d.jpg"
+        "C:\\data\\qt_no_tc_24fps.mov -vf scale=1280:720:flags=lanczos "
+        "-compression_level 5 -start_number 991 -pix_fmt rgba "
+        "C:/result/output.%04d.png"
     ]
 
     assert calls == expected
@@ -239,62 +247,75 @@ def test_multiple_review_clips_no_gap():
         # 10 head black frames generated from gap (991-1000)
         '/path/to/ffmpeg -t 0.4 -r 25.0 -f lavfi'
         ' -i color=c=black:s=1280x720 -tune '
-        'stillimage -start_number 991 C:/result/output.%04d.jpg',
+        'stillimage -start_number 991 -pix_fmt rgba C:/result/output.%04d.png',
 
         # Alternance 25fps tiff sequence and 24fps exr sequence
         #   for 100 frames each
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 1001 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1001 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 24.0 -i '
         f'C:\\with_tc{os.sep}output.%04d.exr '
-        '-start_number 1102 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1102 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 1198 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1198 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 24.0 -i '
         f'C:\\with_tc{os.sep}output.%04d.exr '
-        '-start_number 1299 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1299 -pix_fmt rgba C:/result/output.%04d.png',
 
         # Repeated 25fps tiff sequence multiple times till the end
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 1395 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1395 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 1496 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1496 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 1597 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1597 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 1698 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1698 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 1799 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1799 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 1900 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 1900 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 2001 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 2001 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 2102 C:/result/output.%04d.jpg',
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 2102 -pix_fmt rgba C:/result/output.%04d.png',
 
         '/path/to/ffmpeg -start_number 1000 -framerate 25.0 -i '
         f'C:\\no_tc{os.sep}output.%04d.tif '
-        '-start_number 2203 C:/result/output.%04d.jpg'
+        '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+        '-start_number 2203 -pix_fmt rgba C:/result/output.%04d.png'
     ]
 
     assert calls == expected
@@ -323,15 +344,17 @@ def test_multiple_review_clips_with_gap():
     # Gap on review track (12 frames)
     '/path/to/ffmpeg -t 0.5 -r 24.0 -f lavfi'
     ' -i color=c=black:s=1280x720 -tune '
-    'stillimage -start_number 991 C:/result/output.%04d.jpg',
+    'stillimage -start_number 991 -pix_fmt rgba C:/result/output.%04d.png',
 
     '/path/to/ffmpeg -start_number 1000 -framerate 24.0 -i '
     f'C:\\with_tc{os.sep}output.%04d.exr '
-    '-start_number 1003 C:/result/output.%04d.jpg',
+    '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+    '-start_number 1003 -pix_fmt rgba C:/result/output.%04d.png',
 
     '/path/to/ffmpeg -start_number 1000 -framerate 24.0 -i '
     f'C:\\with_tc{os.sep}output.%04d.exr '
-    '-start_number 1091 C:/result/output.%04d.jpg'
+    '-vf scale=1280:720:flags=lanczos -compression_level 5 '
+    '-start_number 1091 -pix_fmt rgba C:/result/output.%04d.png'
     ]
 
     assert calls == expected