The Time To Live is set to 1 by default in the newer versions of videolan client, therefore multicast doesn't work properly.
In the gui this can be overridden by adding the ttl field as shown below:
Before:
:sout=#duplicate{dst=display,dst=std{access=udp,dst=239.1.1.1:1234}}
After:
:sout=#duplicate{dst=display,dst=std{access=udp{ttl=10},dst=239.1.1.1:1234}}
Or from the command line:
vlc.exe -vvv c:\video\filename.avi --sout udp:239.1.1.1:1234 --ttl 12
