I’m coming mad about this! I hope this is not so difficult as it appear to me until now. It’s seems there’s no a way to play a mpeg video in Blender with standard tools. Something tell me to use a movie-texture, but that can handle only uncompressed AVI files, and you can see the movie only if you make an animation as long as the movie. Don’t you?
I want a surface to display a video, a surface that I can manipulate in 3D space (stretch it, scale, rotate…). I had a look at pygame but it seems that video support for mpeg is no longer maintained (for Windows), than I looked at pymedia but I did not got anything…
Unfortunately I’m not expert in Blender and Python… need help from experienced programmers… I’m sure there are more in this forum!
Any suggestion, examples, link or other will very appreciate.
Here’s a demo… and the scripts to make it all happen:
Enjoy 
http://ash.webpark.sk/gameVideoTex_eng.htm