An opportunity came sooner than I was expecting, and I found – nothing wrong.
I’ve tried both the old player and the new preview client experience on the LG smart TV. If I have the player controls set to handle subs as normal, there is no transcoding. It direct plays.
When I set the player to always burn subtitles I started to have playback issues, but that’s not because of your issue. It’s because of this bug Plex isn’t fixing. 
So I restarted the movie from the beginning and it played fine with transcoding.
Going back to my original response, I don’t think this is an issue with the file or transcoding, it seems more like an issue with the playback client dropping the connection to the server and the player doesn’t have an appropriate error message to display, so it displays an incorrect one. I don’t know the cause, though.
You should start with all the standard things:
- Unplug the power to your TV.
- Reboot your local network, starting with the main unit of your router.
- And then rebooting any extenders after that.
- Also reboot your Plex Media Server.
- Once that is all back up reconnect the TV’s power.
Based on my own personal experiences with LG smart TVs I suggest you don’t use the wi-fi on it. Since you mentioned you were using a mesh system, if you can’t wire the TV directly to the router, wiring the LG to the LAN port on one of your mesh units will allow the TV to function as a “wired connection” and still be wireless in reality.
