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In addition to embedding video in an interactive PDF or SWF output, you can also place a video from a URL. The major benefit of this is that you end up with a smaller file size, but the trade-off is that you must have an Internet connection in order to play the video. To place a video from URL, I select a frame in my layout that I want to contain the video. Down below here I have a URL. I'll select that, copy it, select the frame where I want to place the video, and go to the Media panel.
I'll click down here on this button to Place a Video from a URL and paste in the URL. I'll click OK. And now in the Media panel I can see I have all the normal options for working with video. I can scrub ahead to see the video, I can set a poster for it, set controllers, and so on. So again, the benefit of placing a video from URL is that you don't bloat your document, increasing its file size with all that video data. But the downside is that if someone places the document without an Internet connection, the video won't play.
Two other things to remember: first, the video must be a Flash video, and second, the URL has to be directly to the video. So not every video you see online can be placed from its URL into an InDesign document.
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