There was a codec in the mid-90s that porn sites and some illegal warez groups used that was essentially this. At the time your options were either AVI or a very expensive commercial solution, so someone came up with splitting video files into JPEG's and streaming them over the web and using javascript to slice them back together.

I remember watching star wars on one of the earliest web streaming sites - the image was around 150x150px and would refresh once per second. It was still the most awesome thing I had ever seen at the time, though.