Somewhat related: This semester we got a Moodle in the university. Sometimes the students write the homework in paper and upload a photo to the site. But the maximum files size is 1Mb, that is like the average size of a photo of a paper, so half of the time they have a problem. So if you want to diversify later, you can try with photos. (Good luck getting students to pay for this, but it may be a losing lead.)
Some questions after writing my unrelated comment: [Instant Edit: I tried it now.]
Can I choose a smaller size? [I only can choose bigger sizes. Can I choose smaller sizes?]
Do you add a watermark? [No]
Do you preserve sound? [Yes :), and I can mute it too :).]
More feature requests after trying it:
Can I change the resolution of the video?
It would be nice to see the options before I click upload file.
After I download the video it is not longer available (as promised). Perhaps it would be nice to add some javascript trick to change the link from "Download xyz.mp4" to "You have already downloaded the video. Click here to upload a new one."
The name of the video is uninteligible. Perhaps it should be something like "8mb.uploaded_file_name.mp4".