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i work with videos for the web a lot - usually pixelated or blurry videos are low quality. a lot of sites use low quality videos to lower the file size. they should try the h.264 codec, which can be used for flash or quicktime. it's incredibly efficient - a 500k video using the h.264 codec can be as high quality as a 1.5 Mbps WMV - i was blown away when i first saw it!
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