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Boot your phone in safe mode,see if you can play videos with the default app:
http://talk.sonymobile.com/t5/FAQ/How-to-boot-your-phone-into-safe-mode/m-p/348008#U348008
Strange,can you download bs player or vlc to see how it goes?
Hi and welcome to the community! Since you're new please be sure that you have checked out our Discussion guidelines.
Since the problem still persists in safe mode I would suggest that you try to repair the phone software using PC Companion:
http://www.sonymobile.com/update
In PC Companion, press start on Support Zone > Start on Update the phone/tablet software > Press the blue link that says "Repair phone/tablet".
If the problem still persists, I suggest that you have your phone examined by a service center. Please contact your local Xperia support team for more information:
http://www.sonymobile.com/global-en/support/contact-us/
Cool.
Anytime.