Sony has clearly made video more than just an afterthought in the Xperia Z. You can actually set up the lock screen shortcut to jump straight into video mode, if the record button that waits next to the shutter release in still mode isn’t enough for you.

In video mode, you can shoot 1MP stills by tapping the shutter button above the video record button.
Many of the settings and scene modes available to the stills camera remain accessible in video mode.

The Z provides a fair amount of control over video parameters, including exposure compensation, white balance, metering and focus modes. Several scene modes carry over from the still camera: soft snap, landscape, night, beach, snow, sports, and party. 

In addition to now-standard 1080p 30 frames-per-second full HD video recording, the Z has a few tricks up its sleeve. The most original is HDR video. Before you get too excited, this doesn’t appear to be a true, multi-exposure HDR implementation. Instead, the Z seems to apply a shadows-and-highlights-style correction to each frame, pulling detail out of dark areas of the scene and recovering a bit (though much less) from the highlights. This makes it a useful tool when recording scenes with both bright highlights and deep shadows, but not quite as good as the multi-exposure HDR modes typical of still cameras.

In this frame grab from a normal video, the inside of the truck is lost in shadows while the sky is totally blown out.
Turning on HDR reveals a lot of detail in the truck, but the sky highlights are apparently too far gone to recover.

Less impressive is the Z’s ability to snap one-megapixel stills during video recording -- it’s a nice feature in theory, but the low resolution limits its usefulness.

The Z has a digital video “stabilization” feature that’s supposed to work by compensating for hand movement by re-aligning frames and cropping part of the image. This results in a narrower field of view, but like most similar features it’s not particularly effective: hand motion is just as noticeable when the feature is turned on. 

Video Sample 1 - Good Light

The Z manages exposures and colors nicely in good light, and movement is smooth. However, the image is unusually soft, making it appear a bit less detailed than the HD output of most phones. Focus is confident, and any drift is corrected quickly (the Z’s landscape scene mode is useful if you know your subjects will remain distant, as it locks focus at infinity). The stereo sound is of good quality, though pinhole microphones produce the usual wind noise issues.

Video Sample 2 - Low Light

In low light, the Z captures video that’s acceptable but soft and noisy. Exposure remains good. Focus hunts a bit more than in good light, which is par for the course. The Night scene mode had no appreciable impact on video quality during our testing and since using it disables manual adjustments, you’re probably better off staying in normal video with more control.