Lag
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Why does the game get too laggy to play when I start recording?
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you most likely have a weak PC than what it's needed to record non-laggy gameplay, try turning down your settings like the resolution and quality, maybe that helps, if not then it's most likely on your end
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Try switching to a different Encoder selection. The specific encoders available to you will depend on what hardware you have but the one you currently have selected might not be the most suitable for maintaining the game's performance.
If that doesn't improve things, then as Anexide suggested, try reducing the Quality setting.