Great 4 part series of articles on creating a video chat application.
Video Conference Part 1: These Things Suck. Covers idea like Discrete Cosine Transform, Quantization, RLE, block state formats, Entropy Coding, Choose UDP over TCP for networking: "In other words, we only resend data when absolutely necessary, and only in the right order relative to other updates." Final Statistics: Avg bits per pixel: 0.6 bits for low quality; 1.0 bits for good quality Max usable sustained packet loss: 25%; Max survivable sustained packet loss: 75%.