A system and method are described for combining multiple views of a video game or application into a single video stream (or set of video streams). For example, a system according to one embodiment comprises: a plurality of application/video game instances executed for a particular multi-player video game or application on a hosting service, the application/video game instances being executed in response to control signals received from a plurality of clients; compositing logic executed at the hosting service to combine video streams generated by each of the application/video game instances into a single video stream for a first one of the clients; and compression logic to compress the single video stream with low latency such that the user of the first one of the clients has the perception that the video game or application is being executed locally.