Plex does a lot of transcoding if I recall. There was a couple of modes that I could never get to work correctly, but I think it was because of the low throughput on my particular wifi network. I'm assuming youre running it over local wifi and the connection is at least 802.11n? 802.11b/g might not have the oomph needed for video, even though it has enough for audio (but not 5.1 dts, amazingly enough).
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