I have similar problem to this: Azure Media Services encoded mp4 file size is 10x the original I have a 500MB mp4 file. After encoding with 'H264 Multiple Bitrate 720p' file size is 11.5 GB. Processing costed a lot too. It's no problem with 1 file, but I have to be prepared to share about 100 1GB mp4 files. It has to cost so much? Maybe I didn't know about something? I'd like to share files with AES encryption.
There are a lot of dependencies on what your final output file will be.
1) You have a 500MB mp4 file. Is it SD, HD, 720P? 1080p? Resolution you started at will matter. If you had SD originally, the 720p preset will scale your video up and use more data.
2) The bitrate you started out at matters. If you have such a small file, it is likely encoded at a very low bitrate. Using the 720p multi bitrate preset will also throw more bits at the file. Basically creating bits that are not necessary for your source- as encoding cannot make things look better.
3) You started with a single bitrate - the preset you are using is generating Multiple bitrates (several MP4 files at different bitrates and resolutions.) The combination of starting with a small low bitrate file, and blowing it up to larger resolutions and bitrates, multiplied by 6 or more files tends to add a lot of data to the output.
The solution to your problem is to use "custom' presets. You don't have to use the built in presets that we define. You can modify them to suit your needs. I recommend downloading the Azure Media Services Explorer tool at http://aka.ms/amse and using that to modify and submit your own custom JSON presets that match your output requirements better.