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The video tutorial demonstrates how to reduce the size of an Excel file without deleting data. It is recommended to save a copy of the file before proceeding. The first step involves compressing picture sizes by selecting the picture, going to picture format, and choosing compress under adjust. Different options are available for compressing the picture format. An alternative method is to go to file, click on more, then options, followed by advanced. In the image size and quality section, select discard editing data and deselect compress image file to reduce the file size. This will ensure that pictures are always compressed without manual adjustment.