Packet video is investigated from a systems point of view. The most important issues to its transmission are identified and studied in the context of a layered architecture model. This leads to a better understanding of the interactions between network and signal handling. The functions at a particular layer can thereby be made least dependent on network implementation and signal format. In the model, the higher layers provide format conversion, hierarchical source coding, error recovery, resynchronization, cost/quality arbitration, session setup and tear-down, packetization and multiplexing. Provisions from the network layers pertain mainly to real-time transmissions. Special consideration is given to hierarchical source coding, error recovery, statistical behavior, and timing aspects. Simulation results are presented for a subband coding scheme.