I have a couple observations and suggestions. I don't see anything necessarily wrong with your commands, but lets try to find a solution.
- It looks like your using mpeg4, I'd recommend taking a look at THIS list of supported VLC codecs. I recommend you try h265 or mp4v. Upon closer inspection I don't actually see mpeg4 on that list, so that could be your problem.
- What CPU are you using? It's possible that your system is not powerful enough to stream 1280x720. You don't mention what computer your using and I just want to make sure your not attempting this on a Raspberry Pi or anything.
- Try getting it to work using the GUI. I recognize that the GUI might not be the end solution, but if we can get it to work there then we know it's possible and can continue with the CLI arguments.
- Try on another OS and computer. Can you get it to work on Windows & Linux, does one work better? Again, this will help eliminate some variables about where the problem is.
- Unlikely, but it's possible your USB bus is saturated, maybe the port is only USB 1, or you have an external HDD on the same bus that's taking all the bandwidth.
Try some of the options above, if you figure it out post which solutions worked for you. If it's still not working, post what you've discovered.