You can have the poster frame show, but you must set the poster frame in Encore.
When you drag a video onto a button, you create a link from that button to the video. If it is a video thumbnail button, Encore sets it to play a 15 second clip (or length you specify for all animated buttons in that menu) once the menu is rendered. The video starts at the poster frame (which is set to the beginning of the clip, unless set otherwise).
See "Set Poster Frame":
Usually, you are not putting a whole video; you want a chapter. Pickwhip from the thumbnail button's link to the chapter you want. Poster frame work the same way.
There is a complicated workaround for other issues; if that was the tutorial you were watching, it might mislead you for the "ordinary" use of the animated thumbnail and poster frame. If the tutorial does not make sense with what I am describing, provide a link to the tutorial.
Edit: actually, the Encore default for the poster frame should be the first non-black frame.