a video coding method includes for each target image portion to be encoded , selecting a preferred one of a set of encoding modes by optimizing a function comprising an estimate of distortion and a measure of bit rate required to encode the target image portion , the encoding modes comprising at least an intra frame mode and an inter frame mode ; and transmitting the encoded video stream over a lossy channel . the estimate of distortion is based on a contribution from possible new loss over the channel comprising possible loss of the target block , and on a contribution from possible past loss over the channel comprising possible loss in a history of the encoded video stream upon which decoding of the target portion depends . the method includes accumulating the contribution from past loss over time , such that the estimate of distortion grows irrespective of the contribution from new loss .