So I was doing some testing of my Xbox 360 extender after installing My Movies and LAV filters, and I noticed something strange. First of all, virtually all my videos were playing back with the exception of high bitrate blu-ray rips. I wasn't expecting this giving the 360s limited codec and container support. I also noticed the video looked more compressed when usual. On my PC that manages my extenders there was a thread called "mfpmp.exe" running at close to 100%. So I'm guessing that this process is transcoding video for playback on the 360. Where did this come from? From some googling it appears this is a process built into WMC. Since when does WMC transcode files on the fly for playback on extenders? In all my years of using WMC, I've never even heard of this.
Edit: I've changed the thread title. I'm just wondering, does anyone know how transcoding works from WMC to extenders? I just had no idea WMC could do this. Is it configurable? What formats can it handle?