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How to convert a video

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I would like to convert large video files to MP4 format. I know how to do this but the programs I have tried will not work the way I want them to.

Here is my dilemma: I have large video files from family reunions, high school and college graduation and demonstration videos. Most of the videos are either AVI or MP4. I would like to be able to convert the videos in an attempt to reduce the amount of space they occupy on my hard drive. A reasonable size would be 400MB, perhaps larger for a select few videos. I know that this will reduce the quality but I can't afford to use the disk space for such large files. I have tried WinAVI All-in-One Converter, Xilisoft Video Converter Ultimate, Handbrake and FormatFactory. It seems that the programs do not properly output the video in the size that I want. Any suggestions?
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I pretty much just use Handbrake for my conversions. There are a ton of different settings allowing you to choose output size, resolution, bit rate, target size, etc. What settings did you use during your testing?

You do understand that the quality will be significantly compromised in the conversion to a smaller file size, right? With the low cost of storage these days, have you considered installing a 1TB HDD in your computer? Or perhaps a 1TB external?
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