There’s so much to tell about how media files can be manipulated in web applications, especially when we talk about large amount of video files compared to quality displayed ..

A web application will use certain file formats depending on which technology is used to render videos at front-end and/or back-end streaming server [if there's any]

Since Flash Platform is the best environment for such processes, it was difficult to prepare videos before using them on the web, developers had to have videos encoded from their original formats to FLV in order to use with Flash Player and Flash Media Server, then Adobe added the support for H.264/AAC since the release of Flash Player 9.0.0.115, that was wonderful feature but still we face the same old problem with encoding videos ..

According to my experience, the best practice to make this encoding process easier is to use FFMPEG in conjunction with PHP as a back-end server service, such procedure requires installing FFMPEG along with all its required libraries, after all a developer can use PHP to dynamically encode uploaded videos with FFMPEG and save the final FLV videos on server, plus other features like extracting image frames from videos ..
this article describes how to install FFMPEG on Centos 5

Yet this operation doesn’t give a perfect result regarding to quality and performance, but ..
It seems like there is a better solution is waiting to be unleashed ..

Adobe has announced the upcoming release of Flash Media Encoding Server on fall 2008 ..
you should read the features, quite amazing ..
Just think about the possibilities here ..