An IP video server is a vital part of a complete IP video surveillance system, it is the heart of the system and without it IP surveillance would not be possible. A video server is by definition a computer based device and its sole function is to provide video feed.  The way that IP video servers work specifically is to basically convert an analogue signal into an IP video stream.
IP video servers not only convert an analogue video signal into an IP stream, they also stream digitized video over IP networks. This works in the same way that an IP video camera does, this is made possible because the IP video server uses IP protocols, this then allows the IP video server to be able to stream live video over any kind of network that internet protocol uses.  

More About How IP Video Servers Work

The true benefits of having a system that uses internet protocol networks is that the IP video server is then able to stream live video feeds or streams to any device using IP protocols, so, for example, the IP video server can use a modem that can be accessed by a mobile device that uses that modem. This allows the user to access the IP video server from almost anywhere that allows mobile modem connections.  
IP video servers are mainly used in the security industry, one of the most popular uses for IP video servers is to convert existing analogue signals or CCTV based signals into IP based surveillance signals. This is particularly useful for properties that have established very expensive permanent security surveillance installations in place. It is much more cost effective for these companies to simply use an IP video server as a link between CCTV and IP.  
Another function of IP video servers is to encode the signals that the video server receives, using a codec system. The server can then send the secured and encoded signal out over the chosen network. Another useful feature found on good IP video servers is a choice between various video compression formats, for example MJPEG; MPEG-4 and so on. This allows the user to enjoy greater band width efficiency.