A system and method includes adjusting bit rate based on measured quality in a video conversion module. The video conversion module may be, for example, an encoder or a transcoder. In one embodiment, the video conversion module receives an input stream in a first format and converts the input stream to an output stream in a second format. The video conversion module is coupled to a bit rate controller that controls the bit rate of the output stream. A bit rate controller compares the output quality of the output stream to a target quality, and adjusts the output bit rate responsive to the comparison having a difference greater than a predetermined value.