How do I encode a movie file to under 300mb with PSP Video 9?

[The Overfiend]

I have a PSP-1000 running firmware 6.35. How come lots of sites I visit have 1h30 video clips around 300mb but the best I can get with PSP Video 9 seems to be 700mb?

What settings should I use to get a watchable file around 300mb?