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RE: The case for client side encoding
Something you failed to address was battery life. If clients are doing the encoding themselves, their batteries are not going to last as long. This could possibly even prevent them from watching the video.
As far as encoding/uploading goes, I assume people usually do it when they are connected to wifi, which means they are also probably indoors and have access to power.
For the video playback, we plan to integrate DASH, so mobile devices would stream lower resolution/bitrate video, which consumes less bandwidth, lower antenna usage and less CPU time for decoding.