As you develop your game in XNA, you may soon notice that the size of the game increases quickly. More precisely it is the XNB files that are taking up huge space. Usually this happens when you do not use compression for XNB files. This can easily be solved by changing Content Processor for your 2D art (textures) from Texture (Sprite 32bpp) to Texture (Model, DXT, mipmapped) - XNA Framework.

The size of the XNB files shall decrease significantly. For example, our backgrounds (1280x768) dropped from around 5 MB to 1.5 MB.

One thing must be noted though. In order to use DXT compression, the dimensions of a texture (both width and height) must be multiples of 4. Otherwise, Invalid texture error is guaranteed when you compile the project.

The screenshot below demonstrates how to do that.