I use the following command quite frequently (playing music videos for my daughter) and it works flawlessly:

That's using mplayer, not mediaplayer. The "-fs" switch is to force fullscreen. The "-loop 0" parameter means loop forever.

Another option would be to use MediaBox and put your videos, if you have more than one, inside a playlist. MediaBox has the ability of doing "repeat all" or "repeat one": when your file is playing, tap the titlebar and you'll see the options.