How to set recording quality during recording (from high quality to low quality)
Note: This setting does not apply to external codecs. It applies only to oCamโs built-in codec.
Lowering the recording quality will reduce the size of the recorded video file, but the image quality will also become worse.
There is a menu at the top of oCam. Click Tools - Options, then click Encoding on the left, and you can select the video quality as shown below.
By default, it is set to Very High (high quality).
During recording, the video quality can be selected using the following levels.

Below are captured preview images showing recorded quality from Very High to Very Low.
Image source: http://www.mrwallpaper.com/rubber-duck-city-wallpaper/
Recorded in Very High
Recorded in High
Recorded in Medium
Recorded in Low
Recorded in Very Low

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How to Use an External Codec - Xvid
Go to the official Xvid website.
Click Xvid Video - Downloas in the menu at the top right. ( Do not select Xvid Codec. )

Click the link below.
Click the Download button to download it.
This is the installation screen. Click OK right away.
The detailed explanation is omitted. Just keep clicking the Next button to continue.
If oCam is already running, restart it, then click the Codec button in the oCam main window and click the External Codec menu.
Then check the Use External Codec checkbox, and you will see that the newly added Xvid MPEG-4 Codec is available.
Select that codec.
Click the Settings button to configure the detailed options of the Xvid codec.
