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In this video tutorial, the process of compressing large video files without losing quality is explained. The application used for this purpose is Handbrake, a small open source video transcoder. The steps include downloading Handbrake from the official website, installing the application, selecting the source file or folder, choosing the video format and file format, adjusting video quality, and selecting the file destination to save the compressed video. Quality can be adjusted using a scroll, with reducing quality resulting in a smaller file size. The recommended quality value is around 20 for optimum compression.