If I had to guess, you're probably missing more than "something". You're trying to make a youtube, vimeo, etc video sharing website where you purchased a premium theme but that's not even the start of your problems. A theme won't do anything by itself, it's just a theme, you need a CMS (and not WordPress if you want it done properly) built for this sort of thing.
Are you even using a good, high powered, dedicated server? I'm thinking by your post you're on a VPS which isn't going to work unless you think your visitors don't mind their video conversions taking days to show up on site. You need something in the range of a quad cpu box with 32-64gb ram if you want to convert the videos fast enough where the visitor doesn't go "wtf, I just uploaded a video but it's not there!?". Your users don't know any of the conversions happen, so this needs to be near instant as possible. Ideally you'll have a separate box that then serves the files after conversion.
Does your good dedicated server have PHP, MySQL, FFmpeg, ImageMagik, Nginx with http_mp4_module/http_flv_module, etc all installed and working properly?
From the sounds of it, you're over your head and if I had to guess you're thinking some guy for $10/hr is going to fix this. You're looking at hundreds of dollars to get the server setup and then a few hundred more for the site itself... and that's absolute rock bottom minimum, barely workable, website.
If you want help to do it yourself, just post the site here. It's not worth anyones time to give you one-on-one help with something like this that would help other people. If I'm typing a tutorial for you, it's going to be done publicly where it can benefit everyone.
