After some extensive digging in the code and trying to figure out how the the activity feed is generating the content I found the Auto Action plugin. Here is the issue that we are having:

A user uploads a video in the video tab. Lets say it is the webm video ( you can use these tests: techslides.com/sample-webm-ogg-and-mp4-video-files-for-html5 ). On the video tab this works fine. But go to the activities tab and when we click play on that activity tab it doesn't function.

We updated all plugins to the latest:
CB Gallery 1.0.6
CB Auto Actions 6.3.4
CB Activity 3.0.1

In the frontend you can see that the videos work in the video tab: screencast.com/t/uptE09Ht
But on the activity tab it does not seem to be correct: screencast.com/t/MFRA49BCU4
And you can see that in the DB it stores as a photo instead of a image in the above video - but to prove it here is a snap of that video in the DB: screencast.com/t/Pb0uJ5Zm and so therefore when it prints out the video output it isn't correct and won't display anything.
And here you can see the settings of the action. Obviously this is a default that came with the system because the only way to save is the save as copy at the top right.

So the question remains - what are we missing and why is the video not playing. Also when a video is created is there a thumbnail that is created for it to display in the activity field?

Lastly we have an issue with the latest update of the CB Gallery. Please see the attached image: screencast.com/t/QXa5umGq

Bingo - that worked Videos are now working on the activity stream.

Should I pull down the nightly for CB Gallery to fix that last issue?