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This video tutorial demonstrates how to reduce the file size of an Excel document without losing data. The first step is to compress picture sizes by selecting the picture, going to picture format, and using the compress option to reduce the image quality based on your needs. An alternative method to ensure pictures are always compressed is to adjust the image size and quality settings in the file options. By choosing to discard editing data and not compress image files, you can reduce the file size without compromising picture quality.