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whats a flash compatible file?
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A Flash compatible file would be a file that Flash is compatible with.
To add an externally created background into my project, the file-type of the background would have to be compatible with Flash. Otherwise I would be incapable of importing it into the project.
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flash can handle videos right?
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Right! Since 2004's Flash MX, Flash has been highly compatible with most basic video file-types. And, if the particular file-type is incompatible, video file-types can be converted between each other in seconds.