Plex Media Server can handle video processing in different ways, depending on the situation and the capabilities of the streaming client:
1. Direct Play (No Processing by Server)
If the client supports the video format, codec, and bitrate, the file is streamed as-is without any processing.
The client device handles playback entirely.
2. Direct Stream (Minimal Processing by Server)
If the client supports the codec but not the container (e.g., MKV vs. MP4), the Plex server repackages the file without changing the video itself.
The client still does most of the work.
3. Transcoding (Heavy Processing by Server)
If the client cannot handle the video format, codec, resolution, or bitrate, the Plex server transcodes it into a compatible format.
This requires significant CPU or GPU power on the server.
Common when streaming to mobile devices, web browsers, or slow connections.
Conclusion
If the client supports the video, it plays it directly with no extra processing from the server.
If the client does not support the video, the server does the processing (transcoding) before streaming.