To prepare a video for the web we're given a master copy - such as Betacam or DV (definitely not VHS) which we then import and carefully analyse to make decisions on how the necessary sizing and compression ought to be applied. This to often requires a trial and error process, as every video is different which means every video compresses differently. Achieving a careful balance of viewable size, instant or delayed playback, video frame rate and picture quality are an integral part of preparing video for the web.
We generally stick to three video delivery formats - Flash, QuickTime and Windows Media. The reason for this is that certain versions of Flash are installed on virtually all internet enabled computers, Windows Media Player is standard on all PCs, and QuickTime is standard on all Macs. There are plenty of other formats out there, but as far as accessibility combined with quality is concerned, the three above cover all the bases.