diff --git a/app/packager_util.cc b/app/packager_util.cc
index 1702c414a5..159dcdd395 100644
--- a/app/packager_util.cc
+++ b/app/packager_util.cc
@@ -90,7 +90,6 @@ bool AssignFlagsFromProfile() {
   bool normalize_pts = FLAGS_normalize_presentation_timestamp;
   if (FLAGS_profile == "on-demand") {
     single_segment = true;
-    normalize_pts = true;
   } else if (FLAGS_profile == "live") {
     single_segment = false;
     normalize_pts = false;
diff --git a/media/formats/mp4/encrypting_fragmenter.cc b/media/formats/mp4/encrypting_fragmenter.cc
index dd9bb677f5..08f9569509 100644
--- a/media/formats/mp4/encrypting_fragmenter.cc
+++ b/media/formats/mp4/encrypting_fragmenter.cc
@@ -38,6 +38,11 @@ EncryptingFragmenter::~EncryptingFragmenter() {}
 
 Status EncryptingFragmenter::AddSample(scoped_refptr<MediaSample> sample) {
   DCHECK(sample);
+  if (!fragment_initialized()) {
+    Status status = InitializeFragment(sample->dts());
+    if (!status.ok())
+      return status;
+  }
   if (encryptor_) {
     Status status = EncryptSample(sample);
     if (!status.ok())
@@ -46,8 +51,8 @@ Status EncryptingFragmenter::AddSample(scoped_refptr<MediaSample> sample) {
   return Fragmenter::AddSample(sample);
 }
 
-Status EncryptingFragmenter::InitializeFragment() {
-  Status status = Fragmenter::InitializeFragment();
+Status EncryptingFragmenter::InitializeFragment(int64 first_sample_dts) {
+  Status status = Fragmenter::InitializeFragment(first_sample_dts);
   if (!status.ok())
     return status;
 
diff --git a/media/formats/mp4/encrypting_fragmenter.h b/media/formats/mp4/encrypting_fragmenter.h
index be4c411222..2d79991f33 100644
--- a/media/formats/mp4/encrypting_fragmenter.h
+++ b/media/formats/mp4/encrypting_fragmenter.h
@@ -38,7 +38,7 @@ class EncryptingFragmenter : public Fragmenter {
   /// @name Fragmenter implementation overrides.
   /// @{
   virtual Status AddSample(scoped_refptr<MediaSample> sample) OVERRIDE;
-  virtual Status InitializeFragment() OVERRIDE;
+  virtual Status InitializeFragment(int64 first_sample_dts) OVERRIDE;
   virtual void FinalizeFragment() OVERRIDE;
   /// @}
 
diff --git a/media/formats/mp4/fragmenter.cc b/media/formats/mp4/fragmenter.cc
index 880f741682..923c2c0630 100644
--- a/media/formats/mp4/fragmenter.cc
+++ b/media/formats/mp4/fragmenter.cc
@@ -20,6 +20,7 @@ const int64 kInvalidTime = kint64max;
 Fragmenter::Fragmenter(TrackFragment* traf,
                        bool normalize_presentation_timestamp)
     : traf_(traf),
+      fragment_initialized_(false),
       fragment_finalized_(false),
       fragment_duration_(0),
       normalize_presentation_timestamp_(normalize_presentation_timestamp),
@@ -35,15 +36,17 @@ Status Fragmenter::AddSample(scoped_refptr<MediaSample> sample) {
   DCHECK(sample);
   CHECK_GT(sample->duration(), 0);
 
+  if (!fragment_initialized_) {
+    Status status = InitializeFragment(sample->dts());
+    if (!status.ok())
+      return status;
+  }
+
   // Fill in sample parameters. It will be optimized later.
   traf_->runs[0].sample_sizes.push_back(sample->data_size());
   traf_->runs[0].sample_durations.push_back(sample->duration());
   traf_->runs[0].sample_flags.push_back(
       sample->is_key_frame() ? 0 : TrackFragmentHeader::kNonKeySampleMask);
-  traf_->runs[0].sample_composition_time_offsets.push_back(sample->pts() -
-                                                           sample->dts());
-  if (sample->pts() != sample->dts())
-    traf_->runs[0].flags |= TrackFragmentRun::kSampleCompTimeOffsetsPresentMask;
 
   data_->AppendArray(sample->data(), sample->data_size());
   fragment_duration_ += sample->duration();
@@ -70,6 +73,10 @@ Status Fragmenter::AddSample(scoped_refptr<MediaSample> sample) {
   if (earliest_presentation_time_ > pts)
     earliest_presentation_time_ = pts;
 
+  traf_->runs[0].sample_composition_time_offsets.push_back(pts - sample->dts());
+  if (pts != sample->dts())
+    traf_->runs[0].flags |= TrackFragmentRun::kSampleCompTimeOffsetsPresentMask;
+
   if (sample->is_key_frame()) {
     if (first_sap_time_ == kInvalidTime)
       first_sap_time_ = pts;
@@ -77,9 +84,10 @@ Status Fragmenter::AddSample(scoped_refptr<MediaSample> sample) {
   return Status::OK;
 }
 
-Status Fragmenter::InitializeFragment() {
+Status Fragmenter::InitializeFragment(int64 first_sample_dts) {
+  fragment_initialized_ = true;
   fragment_finalized_ = false;
-  traf_->decode_time.decode_time += fragment_duration_;
+  traf_->decode_time.decode_time = first_sample_dts;
   traf_->runs.clear();
   traf_->runs.resize(1);
   traf_->runs[0].flags = TrackFragmentRun::kDataOffsetPresentMask;
@@ -116,6 +124,7 @@ void Fragmenter::FinalizeFragment() {
   }
 
   fragment_finalized_ = true;
+  fragment_initialized_ = false;
 }
 
 void Fragmenter::GenerateSegmentReference(SegmentReference* reference) {
diff --git a/media/formats/mp4/fragmenter.h b/media/formats/mp4/fragmenter.h
index c1de2341c0..4c55480663 100644
--- a/media/formats/mp4/fragmenter.h
+++ b/media/formats/mp4/fragmenter.h
@@ -40,8 +40,10 @@ class Fragmenter {
   virtual Status AddSample(scoped_refptr<MediaSample> sample);
 
   /// Initialize the fragment with default data.
+  /// @param first_sample_dts specifies the decoding timestamp for the first
+  ///        sample for this fragment.
   /// @return OK on success, an error status otherwise.
-  virtual Status InitializeFragment();
+  virtual Status InitializeFragment(int64 first_sample_dts);
 
   /// Finalize and optimize the fragment.
   virtual void FinalizeFragment();
@@ -54,6 +56,7 @@ class Fragmenter {
   uint64 earliest_presentation_time() const {
     return earliest_presentation_time_;
   }
+  bool fragment_initialized() const { return fragment_initialized_; }
   bool fragment_finalized() const { return fragment_finalized_; }
   BufferWriter* data() { return data_.get(); }
   BufferWriter* aux_data() { return aux_data_.get(); }
@@ -72,6 +75,7 @@ class Fragmenter {
   bool StartsWithSAP();
 
   TrackFragment* traf_;
+  bool fragment_initialized_;
   bool fragment_finalized_;
   uint64 fragment_duration_;
   bool normalize_presentation_timestamp_;
diff --git a/media/formats/mp4/segmenter.cc b/media/formats/mp4/segmenter.cc
index 97dcf7584d..de8d39f14e 100644
--- a/media/formats/mp4/segmenter.cc
+++ b/media/formats/mp4/segmenter.cc
@@ -204,8 +204,8 @@ Status Segmenter::Initialize(const std::vector<MediaStream*>& streams,
 
   // Use the reference stream's time scale as movie time scale.
   moov_->header.timescale = sidx_->timescale;
-  Status status = InitializeFragments();
-  return status.ok() ? DoInitialize() : status;
+  moof_->header.sequence_number = 1;
+  return DoInitialize();
 }
 
 Status Segmenter::Finalize() {
@@ -320,19 +320,6 @@ uint32 Segmenter::GetReferenceStreamId() {
   return sidx_->reference_id - 1;
 }
 
-Status Segmenter::InitializeFragments() {
-  ++moof_->header.sequence_number;
-  Status status;
-  for (std::vector<Fragmenter*>::iterator it = fragmenters_.begin();
-       it != fragmenters_.end();
-       ++it) {
-    status = (*it)->InitializeFragment();
-    if (!status.ok())
-      return status;
-  }
-  return Status::OK;
-}
-
 Status Segmenter::FinalizeFragment(Fragmenter* fragmenter) {
   fragmenter->FinalizeFragment();
 
@@ -379,9 +366,8 @@ Status Segmenter::FinalizeFragment(Fragmenter* fragmenter) {
     fragment_buffer_->AppendBuffer(*fragmenter->data());
   }
 
-  Status status = InitializeFragments();
-  if (!status.ok())
-    return status;
+  // Increase sequence_number for next fragment.
+  ++moof_->header.sequence_number;
 
   if (end_of_segment_)
     return FinalizeSegment();
diff --git a/media/formats/mp4/segmenter.h b/media/formats/mp4/segmenter.h
index 2bf48e53ef..04e41b5d7f 100644
--- a/media/formats/mp4/segmenter.h
+++ b/media/formats/mp4/segmenter.h
@@ -111,7 +111,6 @@ class Segmenter {
   Status FinalizeSegment();
   uint32 GetReferenceStreamId();
 
-  Status InitializeFragments();
   Status FinalizeFragment(Fragmenter* fragment);
 
   const MuxerOptions& options_;