It does the same for all the video I have tried .mp4, .mkv and .avi as well as large or small file sizes (5 - 850MB).
I did not set this up on a WIndows 7 machine that I had access to as it is not my computer and I use my MacBook almost exclusively with the MyBook Live that I have been using for 3 years now.
As I am away from home I do not have access to the Windows machine for the next 2 weeks.
I an running OSX 10.7.5 (Lion) and VLC 2.1.5 for playback.
Telus, the ISP I have to use here is a pain in the **bleep** to work with and their routers are total **bleep**, so I am also going to have a look in it later.
I should re-mention I have had no problem watching any of the files with my Samsung Tablet using the My Cloud app.