This paper investigates the perceptual quality of video affected by packet losses. We focus on low-resolution and low bit-rate video coded by the H.264/AVC encoder and the packet loss patterns likely in low bit-rate wireless networks. We examine the impact of several factors on the perceptual quality, including the error length (the error propagation duration after a loss), the loss severity (measured by the pixel difference between reference and distorted video in the area affected by a loss), loss location, the number of losses, and loss patterns. Based on our findings, we propose an objective metric for the quality degradation due to packet losses that considers all these factors. We also validate a prior metric relating the quality degradation due to compression artifacts and the peak-signal-to-noise ratio (PSNR). We finally propose a full-reference metric that measures the overall quality degradation due to both packet losses and lossy compression. The proposed metric correlates very well with subjective ratings, for a large set of video clips with different loss patterns, coding artifacts, and scene contents.