For now, Hotscreen converts the videos to 480p 25fps so it doesn't use too much cpu power to play them. (especially if the overlay needs to display 10 videos at the same time)
What you want is a quality slider that let the user choose how much the video is shrunk ? I can add that in the next update.
If you want the command line to convert a video now :
ffmpeg -i video.mp4 -vf "scale=480:480:force_original_aspect_ratio=decrease,fps=25" -q:v 6 -q:a 6 output.ogg