You need to set up a lower quality for the output file in order to reduce the video size. Go to video settings option and select a lower resolution and a small aspect ratio. Also, I suggest you Webcam Capture software. It is a free and small utility that is compatible with PLEOMAX PWC-3800. Once you launch the application, press the Camera Settings tab and select 160x120, 176x144, 320x240, 352x288, or 640x480 from the Image Size drop-down list.