The correct answer is: as high as you can make it, but still maintain your site's bandwidth budget and server load, AND support as many surfers as you can.
Anything over 1mbps is pushing it for most surfers, as they simply don't have the sustainable bandwidth. People will accept lesser quality video but not constant stopping to refill the buffer.
If you are truly steaming your content you can set up bitrate negotiation and serve the highest bandwidth version the surfer's connection can accommodate.
Some tricks you can use save on the bitrate while not greatly sacrificing quality:
* Encode in mono, 22050 kHz.
* Set a larger keyframe distance, maybe every 3-6 seconds. The default is usually 1 second.
* Set the frame rate 15 or 20 fps. Won't work with lots of action as it could cause strobing.
* Consider a slightly smaller video, but remember to actually encode the video at the same size as your player, and be sure the H and W dimensions are both evenly divisible by 16. (FLVs have a preset macroblock size of 16x16 pixels.)
Depending on the encoder you use it may not do a good job converting from interlaced content. If that's what's in your AVI you'll want to remaster it de-interlaced first.
You want VBR 2-pass. No single pass encode will ever give you the best quality. The first pass is to get a kind of encoding summary, and the second pass is where the actual encoding is performed.
There is no sense in a CBR encode for video, as this will constrain the bitrate for everything. You want to use VBR, set a higher average bitrate, and allow for a reasonable peak bitrate to handle the fast motion.
I don't have the latest Adobe enoder, but I know the older version for Flash 8 just doesn't have the functionality to play with a lot of settings. You need either On2 Flix Pro, or a version of Sorenson Squeeze that does FLV.
@abshard: FLV is technically a codec that also uses a proprietary container. There are only two: Sorenson Spark and VP6. (Actually, not quite true. There are two variations of VP6, VP6-S and VP6-E. You use VP6-S for HD content. Adobe confuses things by using an "F4V" extension for H.264 videos meant for Flash Player. These are really MP4 containers.)
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