Let me explain what this service is.
Halo 3 has a feature where you can record your game play. This is not saved as video. It is saved as the sequence of events that occurred during the game. Such as controller inputs, AI, physics, etc. This is an incredibly smaller file than video. You can then save the film to your File Share, which is stored on Bungie.net servers. In order to view these films, you would have to download the film and view it on your 360 because you need the Halo 3 engine to view it.
What Bungie is offering here is a service to render these saved Halo 3 files into video. For Bungie to be able to do this, they have created a render farm of Halo 3 engines on servers that are taking these files and rendering them to video. This requires a lot of space and cpu time to support a community the size of Halo 3. As much as I would like for it to be free, there really is no way for them to offer it for free.
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