I’m running into the same error a number of other people have posted about. On both my Windows Computer, and PlayStation3, I get “This server is not powerful enough to convert video”. Both of my devices play the videos (avi format) but I thought Plex would be fun to play with. I read somewhere about how I should make sure Direct Play or Direct Stream should be enabled. However, I cannot find that to be able to enable them. Can someone talk me step-by-step where this would be found?
On my computer, I do have the Plex settings screen up and even in advanced mode, I am not seeing anything like that. Any help would be appreicated. And I’m a new Plex person so be kind 
For the playstation to DIRECT PLAY media it needs to be in an MP4 container, not AVI
See: https://support.plex.tv/hc/en-us/articles/204377253-What-media-formats-are-supported-
On your PC are you watching media with the plex.tv/web interface or another plex app?
That’s unfortunate because my PS3 plays my movies off my NAS as it is. I just wanted to add Plex to it because of the way it organizes the movies. So I guess there is no way to use Plex without converting 700 movies to MP4?
Plex will automatically convert it on the fly assuming the PC//NAS plex media server runs on is powerful enough.
Can you recommend any changes that I can make to Plex or my NAS (Seagate Personal Cloud) so I can see if this might work?
The Seagate Personal Cloud , I believe, uses an ARMv7 processor which does not support transcoding.
There isn’t anything to do, as it will not transcode. So you are left with converting the media to a compatible PlayStation format outside of plex.
I converted a single avi file to mp4 format in hopes that it would work. Plex, on the PS3, recognized i but then I got the new error SERVER IS NOT POWERFUL ENOUGH TO CONVERT THE FILE. I had hoped by converting it to mp4 that this would’ve solved the problem since it no longer needed to be converted. Apparently I was wrong.
