I use handbrake to encode videos to x264 mp4 and I notice that if I checkbox "Web Optimized" the videos tend out to be poor quality as compared to a non-web optimized video. Is this normal?
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There is no difference in quality. You probably tested different videos or used different settings
All it does is place the moov atom at the beginning for MP4 container. It's used so videos can play immediately when streaming on the web, before downloading the entire video.
Don't really understand why they don't just put it at the beginning anyway by default.