The only issue I have with the video quality on the Nexus 7 has to do with the screen in general, where the colors are a little too washed out. Perhaps I've gotten too adjusted to the over saturated colors on the Super AMOLED screen of the Galaxy S III.
But other than that, videos look plenty sharp, and play very smoothly on my N7.
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I too thought the same but its the other devices with the over saturated colors.
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