.mp4 is best. Later versions will support more video formats but I think that for the moment we are stuck there. I need to look into what github.com/mafintosh and github.com/feross are using. The basic tech on that site is called webtorrent. If there is a video being viewed by 500 people, the server doesn't need much bandwidth at all. Instead, the users serve the video to one another.
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I think the size limit is on your hard drive if I had to guess.