We've seen plenty of apps promise to allow musicians to play with each other in real time across the Internet, as if they were in the same room. However, they generally didn't work perfectly due to the signal taking too long to traverse an Internet already teeming with cat videos and Angelina Jolie's right leg. As for adding video too--it's just not happening.
The answer could be LOLA--not from the eponymous Kinks song, but standing for "LOw LAtency."
Unlike apps that use the Internet, which either tend to include a delay or employ tricks like having each player play along to what the other one played a measure earlier, using MIDI, or going fully asynchronous, as with Indaba Music, LOLA uses Internet2, a super-fast and presumably cat-free second internet used by educational and research facilities (the same people who generally used the regular internet before the rest of us showed up).
LOLA is able to beam performers to each other with a latency of 20-50 milliseconds over Internet2, which is in the ballpark of how long it would take the sound to reach a musician on one side of a stage from a performer on the other--with video. On the other hand, according to Internet2's backers, commercial apps that use the regular internet can't get below 200 milliseconds, which jibes with our real world experience. Stupid cat videos!
The LOLA system was demonstrated last fall during the Internet2 members' meeting, and it will see action again at the Performing Arts Production Workshop in Miami on March 4-6, co-hosted by Internet2 and the Michael Tilson Thomas-captained New World Symphony.
More details are available here for musicians who might have a real use for this. For the rest, it stands as a sort of proof that the idea of collaborating with other musicians over the internet with video in something close to near real-time probably isn't possible with the regular internet, although we can still have fun with it, of course.