Transcoding happens on the fly, in hardware I assume. The compression is configurable, from a very high quality 1080p profile, down to more lossy streams for mobile devices, 3 profiles total IIRC (non tweak able). The highest quality mode is _almost_ indistinguishable from the OTA signal. No lag or stutter, whatsoever.<p>An added bonus of the transcode is the reduced bandwidth in the LAN. Previously I needed CAT5 for a stable ATSC stream, now Wifi suffices (e.g. to iPad&#x2F;iPhone). There is an app for the iPad, to watch those streams. On iPad Air 2 it renders 1080p without lag.<p>Also, putting the HD Homerun in the network let&#x27;s one get away with a small head unit (in my case an Intel NUC).<p>You are correct, the resulting files are still wtv container, but with h.264 stream inside. VLC can play them fine. Not sure about conversion to MPEG4.<p>A 1-hour show comes out around 1.5GB (from memory), maybe less. Much better then before.