UPDATE: Now it appears to be working correctly. I hope they have fixed it.
Video hosted in Drive
If you click the play icon the video does not play, it times out, eventually.
You can play the video if you click the pop-out icon and play it from that window.
The problem has been escalated to the Sites Team. Also there is a discussion about it in the Google Drive forum.
What about videos that have no pop-out icon?