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I have a 20 MB FLV video file at the backend and I'm serving them through FlowPlayer.

(a) Does the end-user ultimately download 20 MB worth of information when watching the video or would it be less?

(b) What video bitrate should an FLV file before we start seeing diminishing returns on quality when viewed over the website? (okay - this is open ended / vague!)

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The Delivery Options section of Flash Video at Wikipedia is a good reference on how FLV is hosted.

And then check this Flash Video bitrate calculator.
there is also FLV Data Rate and Bandwidth... Demysitifed.

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The only part I can answer is that the user will download 20 MB by the time he has finished playing. However, he will not re-download when doing a replay.

The diminishing returns part is directly proportional to the effective bandwidth between the website and the client.

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a- If it watch the whole movie, yes, it does download the whole 20mb, if not it depends on how many megabytes the player has buffered before the viewer goes to another page.

b- It depends on the resolution of the movie and the codec used, usually if the movie is PAL or NTSC, then 1500 to 2000 Kb/s it's ok, less than that will degrade. If is 720p you have to go higher because it need more kb/s to keep the quality.

Also, no many sites use flv anymore, the most common use right now ( when it's a flash player ) is to create a flash movie container with the player and stream a mp4 video file, has better quality and it's more portable. Here's a clear explanation and examples to the streaming and the resolutions: Exploring Flash Player support for high-definition H.264 video and AAC audio

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