First of all, as Rich mentions the AVI file type is a container. You need to determine what exactly is in that container in order to determine how best to reencode it.
If you want to compress it at the same time (while still maintaining excellent quality) you could use the freeware Handbrake. Just feed it the AVI file and choose the High Preset and MKV as the output container and it will do the rest automagically.
If you don’t want to compress it then the freeware ffmpeg will do the trick. However, in that case you need to know what video and audio streams you want to change. For example, if the video is okay (say, H264 or MPEG) then you can leave it alone. If the audio is AC3 you can leave it alone. You can use ffmpeg alone to find out what you have (syntax would be ffmpeg -i camerafile.avi and then it will show you). After that let us know and I’ll give you the right syntax for changing it to a Live format.