While watching videos on my desktop(not in browser) I want to make the background dark.
For eg:
In the above pic I want everything to be black except the video. I don't want to make it full screen due to the reduction in the quality of the video.
This is actually not a solution but may I suggest you to use a more advanced player like VLC?
With VLC you can disable scaling with Video->Scale .
Probably a nicer solution is the compiz-plugin dim inactive
which once enabled will fade out all windows except the active one.
Ensure you have installed the package compiz-plugins-extra
To try it out, run ccsm
(compiz-config-settings-manager) and
<super>p
For F11 to work, you will have to go to video tab and deselect always fit window. Then you can select the video size.
In VLC, go to VIDEO-->UNCHECK "ALWAYS FIT WINDOW" .
Now you can go full screen without the video being stretched.