Decoders:

K-Lite Codec Pack
Magic Camera may need some video/audio decoders for correctly playing video files.

K-Lite Codec Pack Mega Version is recommended. If you use 64bits Windows, also install K-Lite 64-bit package.

Real Alternative    QuickTime Alternative
If you want to play RMVB or QuickTime video formats, the Real/QuickTime Alternative is also required besides K-Lite Codec Pack.

wmv videos
For wmv video formats, you need to install the latest version of Windows Media Player (You can download it from Microsoft website).

NOTE:

You need to restart Magic Camera after installing the above video codec.

Troubleshootings:

After installing K-Lite Codec Pack, if you still have problems on playing videos in Magic Camera, you may try:

1) Click 'Startup Menu->K-Lite Codec Pack->configuration->ffdshow video decoder'.
2) Switch to Output page, check if RGB32 is selected.

3) Switch to DirectShow control page; drag the 'merit' bar to 'very high'.

NOTE for Windows 7 Users: Disable Microsoft dtv-dvd decoder

Windows 7 forces applications to use Microsoft's own dtv-dvd video decoder, which has many compatible issues. So if you cannot play some videos inside Magic Camera on Windows 7, you may try:

1) Go to 'Menu->K-Lite Codec Pack->Tools', and then launch Win7DSFilterTweaker;
2) Choose "FFDShow" when available, and disable all Microsoft choices.

You can also google 'disable Microsoft dtv-dvd decoder' to find more reference.

How to play Flash/Flv files on Magic Camera

Configure the necessary Flv decoders, and then Magic Camera will play Flv files without problem. To know how to configure Flv decoders, see this article.