As your canvas is 720p , set your webcam to no more than 720p
1280x720x30FPS 3500 Kbps Veryfast:
19:57:57.079: Output 'simple_stream': Number of skipped frames due to encoding lag: 1522 (9.5%) --> CPU overloaded
19:57:57.079: Output 'simple_stream': Number of lagged frames due to rendering lag/stalls: 289 (1.8%) --> GPU overloaded
19:57:57.079: Output 'simple_stream': Number of dropped frames due to insufficient bandwidth/connection stalls: 614 (3.8%) --> Network issues
Your CPU can´t encode properly.
Rescale to 600p
Reduce ingame graphics and/or set VSync
AVI: Transform using Handbrake to a lower resolution video.