You can actually skip the Music app part, the same steps exist in the videos app directly. iTunes must be open for this all to work mind you. Make sure the Apple ID in question is the same on both devices (computer and iPhone), make sure its set up in the Video Menu under Settings on the iPhone, then open the Videos app. There should be an option for "Shared" then upon tapping that, your iTunes Library will appear as an option.in the Music app, you have to goto More > Shared > Your Library
thenwhen it connects you should be able to go back to Video and stream your videos.