I am new Premiere but I have been using Pinnacle Studio for about 2 years now. In Pinnacle Studio, I have gotten used to converting my captured AVI files to MPEG for smaller file sizes and it seems to work fine. Is this conversion from AVI to MPEG a wise thing to to with Premiere?

LTrain

Not only wise but very necessary if you intend to make any DVDs as DVD authoring packages want MPEG2.

Some prefer to let the DVD authoring package do the encoding to MPEG2 from AVI but I prefer to let Adoeb Premiere Pro do it.

But back to your post.... You implied that the reason for the conversion is file size. If that is your only aim then (for web site downloading maybe?) then there will be better formats for you to aim for. Export from Premiere as WMV and your file sizes will drop even more considerably. But be warned, my experience show that WMV encoding is a slow old process.

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