As of today, the Smooth Streaming Extension for IIS7 is in Beta. With this extension, video viewers can get much better experience by starting up instantly, seeking instantly, and getting the best quality that their network and CPU conditions will allow for any point in time. Smooth Streaming Extension for IIS7 does this utilizing the benefits of HTTP caching, and by communicating using cacheable requests and responses, providing the best Quality of Service.
A few month ago, Microsoft together with Akamai, launched SmoothHD – a site that demonstrates this technology. You can watch high definition videos with no buffering time, and see how it dynamically checks what is the best bit rate that fits your network bandwidth.
You can install this extension using the new Web Platform Installer, or download directly the x86 or the x64 version.
For further reading, I would recommend starting with Getting Started with IIS 7 Smooth Streaming, Simulate difference scenarios with the bit rate change and go into some more advanced settings.
You could also encode your videos an upload them directly to your IIS Server using Expression Encoder 2 Service Pack 1.
For more extensions for IIS7, visit the IIS7 Extensions Page.