You have to make sure, when you compress the files that you make them streaming ready. I found this to be the best export format:
? Format: MP4
? Compression: H.264
? Quality: High
? Data Rate: 2200 kbits/sec
? Optimized for: Streaming
? Image Size: 1280 x 720 (HD) or 640 x 480 (SD)
? Audio: AAC-LC
? Data Rate: 96kbps
? Channels: Stereo
? Output Rate: 44.100 kHz
? Encoding Quality: Good
? Steaming: Enabled
? Max. Packet Size: 1450 bytes
? Max. Packet Duration: 100 ms
? Optimized for server