Smooth Streaming, an IIS Media Services extension, was created for playing video over the internet and reducing the amount of time a client would wait for buffering on slow connections. The format can include video compressed at several bit rates. The client can automatically switch between the available streams when the bandwidth changes.
This automatic video switching is built into the Silverlight video player. So, all you need to do is put the resulting video on the web site. Silverlight will automatically pick the video stream that matches the available bandwidth.