All videos are hosted on the WP servers…if you have a blog with wordpress.com or buy the plugin – they’re hosted there.
If you want to host videos on your own server you need to install the open souce code yourself – then you can have the videos on your own server.
If you want there is a already made plugin that will work on your site, the only downside you need to have encoding.com do the conversions – see encoding.com/plugins for more detail.
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