Current video conferencing applications do not scale to support a large number of participants. This article describes an IVC system that combines the best attributes of video conferencing and multi-user virtual environments. It is shown that each participant of IVC has a virtual context that is defined by his/her perspective and perception about the quality and relevance of video and audio of others. The virtual context determines both the visibility status and the required quality of videos of participants. This information can be used to dynamically alter the multicast trees that are formed among clients for the purpose of multimedia dissemination so that only the relevant videos are transmitted to end users. In addition, it is possible to reduce the video quality of a given user in response to the virtual context without the degradation having any perceptual impact. The combination of these factors reduces the required upload and download bandwidth of clients by more than 90 percent on average, making IVC highly scalable to support very large gatherings.