Gamma correction need to be applied in video processing since the transfer function of video acquisition and video display is non linear. Here is the schematic diagram of a gamma circuit:
If gamma value equal to 1, the the transfer function is linear. Typical CRT usually have gamma factor from about 2.0 to 2.4 in their transfer function. The effect of this nonlinearity is seen as compressing the blacks and stretching the whites. Video acquisition devices usually contain a circuit to correct this nonlinearity. Such a circuit is a gamma corrector or simply a gamma circuit. [Source: Linear Technology Application Notes]
