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and here is (almost) the same screenshot made in 0.8.6i
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Windows, directX (tried changing output to openGL or video memory - same result), video is VBR H.264/MPEG-4 AVC, other players e.g. mplayer show video of same the quality as 0.8.6. So... it is not only the interface that is ruined in newer versions, but video quality as well?