I've had issues with Nexus 7 2013 16gb WiFi as well. Tried all above suggestions, including factory resets, installing latest Android version, disabling google play services (was not a good idea) downgrading and upgrading google play service versions, etc etc. but still had extreme lag and pixelation.
What solved it for me was rooting it using Nexus Root Toolkit v2.0.5 | WugFresh
Why this should work I don't know . I was actually going to install a custom ROM after that but for now I'm happy.
I had already enabled developer options before rooting, enabled USB debugging, tried different Hardware accelerated rendering options, but nothing removed the lag.Are you saying that simply Rooting the Nexus 7 2013 made is able to decode incoming video better? Or, did you change developer-level settings? Tnx! Bob