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In this video tutorial, the presenter demonstrates how to reduce Excel file size without deleting data. It is important to save a copy of the original file before making any changes. The first step is to compress picture size in Excel by selecting the picture, going to picture format, and choosing compress. Different options are available to reduce the picture format, such as adjusting the PPI for printing. An alternative method is also suggested, where the user can go to file, click on more, then options, and finally advanced to set image size and quality settings to automatically compress images.