Hi- yes, it's counterintuitive but the file size can increase due to the encoding used within the AVI file. TinyTV uses a very low power microcontroller so the AVI contains a MJPEG video stream and uncompressed audio which is all it can handle. The compression ratio is low compared to H264 that might be in a MP4 file, but that's how we're able to achieve the video playback on a device this size/cost.
Thanks,
Ben