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using .wmv is solely for windows, cant play them on macs. So lost customers right there. .mov = quicktime .mp4 = mpeg 4. i prefer mp4 and offer streaming/downloadable videos in multiple sizes. Nearly every computer comes with the software preinstalled to play .mp4.
Watermark, yes the whole video. I use compressor to put in on and make it small in the lower corner.
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