Unity includes its own video player implementation ( https://docs.unity3d.com/Manual/Video.html ), so presumably you'd mainly want to use VLC for wider range of supported codecs?

Basically. Unity video player is fine if you control the content. The other very reasonable option is to funnel shared content through a synced web browser interface. I've developed a few collaborative XR applications, and have used a blend of things to support sharing.

It’s not hard to use libavcodec to transcode, though.