How do I encode my MP4 files? – Brid Video, LLC.

If you don't yet have a tool for transcoding your videos, you should download HandBrake. It is a free desktop tool for Linux, MAC and Windows that contains many settings beyond the scope of this guide.

For MP4 videos to look good (i.e. no visible artifacts), here are some target video bitrates. Don't use them as hard rules, but do a few tests with your video and use the smallest bitrate that looks good:

Output size	Bitrate	Filesize
320x240 pixels	400 kbps	3MB / min.
480x270 pixels	700 kbps	5MB / min.
1024 x 576 pixels	1500 kbps	11MB / min.
1280x720 pixels	2500 kbps	19MB / min.
1920x1080 pixels	4000 kbps	30MB / min.

Select your source video using the Source button.
Set the destination of the encoded video using the File box.
From the Presets drawer, select the iPhone & iPod Touch preset.
In the Quality field, set a constant quality of about 20 (good) to 25 (decent). This feature automatically sets a good video quality.
Check the small Web optimized box. It ensures the metadata of your video is written at the start, so Flash can swiftly see its duration and dimensions.
Now click the Start button and see your encode getting built!

Repeat these settings for the 720p HD compression, but use the Regular » Normal preset instead of the iPhone/iPod one. If your source video is larger than 1280x720 (or you want 640x360), you can scale the output by clicking the Picture Settings button.