In this paper, we study the performance of rate-distortion optimized video streaming over traces of packet delays and packet losses collected in the Internet. The study provides us with an understanding how important rate-distortion optimization may be for Internet streaming today and when it actually pays off to perform it. We propose a simple technique for channel estimation that can be incorporated within rate-distortion optimized streaming to remove the assumption of known channel statistics. In the experiments, performance of rate-distortion optimized streaming is compared to that of simpler transmission techniques such as ARQ.