System and method for automatic adjustment of streaming video bit rate

A system and method for automatically sets the encoding bit-rate across a network. The method includes encoding an original media stream with an encoding bit rate having an adjustable rate, transmitting the encoded media stream to a receiver, monitoring a throughput of the encoded media stream, computing an adjustment to the encoding bit rate, and adjusting the encoder's encoding bit rate. A throughput monitor (which can be freestanding, part of the transmitter, or part of the receiver), is operable to monitor the encoded media stream, wherein the transmitter is operable to adjust the encoding bit rate using a result of the monitored throughput. The transmitter and receiver both contain a buffer, and respective buffer monitors. Conditions (e.g., overflow, full, empty) at the transmitter or receiver buffer are detected by the respective transmitter or receiver buffer monitor, where upon a repeated condition the encoded bit rate is adjusted higher or lower.