Animation using Photoshop CS3 - question about videos and file sizes

Hello. I decided to have a little play for the first time with trying to do something animated in the above. My result was, uh, the above, ^^ and my discovery was that unless I made the video minute on the icon... and preferably also made it black and white so I could reduce the number of colours as much as possible, it seemed impossible for silly 'ole me to make anything that looks any good at all that isn't maaassssiiivvveeee in file size. So I was wondering whether anyone had any tips on potential ways to reduce file size while keeping quality as good as possible? I thought it might make a difference if you saved the original video clip in a different format, but it didn't seem to, hmm. Thanks in advance for any help anyway :).