As far as videos are concerned, it plays all the AVI files I have thrown at it (I use Mobo Player with hardware decoding). HD files (MKVs) will need encoding as only 1 of the 7 or so 720p/1080p music videos I tried actually worked, but after a quick encoding job they worked flawlessly.
I haven’t played many videos but those that I have played have been faultless. Again I’ve also been using Mobo Player. I heard that TouchWiz UX comes with more codecs so more encoding may not be necessary.