If your video preview image does not match the size of the player container, it will be automatically reduced to an appropriate size.
In this case, if the player file and image file are on different domains, the security policy of Adobe Flash will not allow direct access to the file image, and therefore, the image will be reduced without smoothing. Smoothing (also known as anti-aliasing) is a technique used to add greater realism to a digital image by smoothing jagged edges on curved lines and diagonals to make the image look nicer.
Example of the image without smoothing:
The only way for the flash-player to perform smoothing on preview images, is to place the file titled crossdomain.xml in the root directory of the site (detailed specification for this file can be found on the official website of Adobe).
Example image with smoothing: