Yes, VLC being the worst was a meme back in 2007. To the point where people got involved in the project, just to fix it from being so bad.

Where was that a meme?

I'm using VLC since the codec pack times and it always did what it was supposed to do. Never had any relevant issues with that. I only knew it as THE go to program if you didn't want to bother with codecs anymore. I've never heard about this "meme" before.

It was notorious for crash bugs and poor implementations of "advanced" format features. A major fansub group got fed up of complaints to the point where they put out an episode that deliberately triggered bugs in VLC's ASS rendering to make their subtitles unreadable on VLC (I think this was gg with code geass episode... 16? 17?). That particular problem was solved when VLC abandoned their subtitle rendering code and switched to using mplayer's libass, but for a long time there were similar concerns about support for other formats (e.g. rendering 10-bit video correctly).

So it was actually a specific group that had a specific problem with it and it wasn't a wide spread and general opinion. Well...

GG were the most trollish about it (since I figured you'd want a specific documented incident to refer to), but it was a widespread and general opinion among anime video encoders (and to the best of my knowledge any video encoders who were pushing the boundaries at the time shared the same views, though I'm less familiar with the non-anime communities).

No, that's just one documented instance. VLC being bad was a meme outside the anime community, too. It affected anyone trying to utilise modern features for video playback.

4chan