To use this library you must have FFmpeg installed and configured on your server. You must update its settings and fill in correct path to FFmpeg on your server, as well as video and audio codes you would like to use. You may include additional encoding parameters in the "optional flags" text box. If you don't know where to find any of those values, contact your hosting provider for assistance.
If you have trouble encoding videos, consider enabling "debug mode" setting and encode video manually in the control panel.