Video buffering on local network + audio transcoding vs. direct play

Was watching one of my movies on Plex last night and for the first time since installing Plex the movie would start buffering. At the same time that I was watching a movie upstairs on my ROKU connected to WiFi, my daughter and a friend were watching a movie on the ROKU connected via ethernet downstairs. Additionally, i had one friend that was watching a video remotely. No one was having buffering problems except for me. In the attached screenshot…I was watching Pacific Rim.
Plex streaming problem

I noticed that my daughter was direct playing both the video and the audio for the BluRay I Am Legend. I however was transcoding both the video and the audio. I don’t know why since both of these were being streamed locally. I understand that the remote user likely had to transcode at a lower quality to avoid buffering but why me. And why is the Mbps so much higher for Pacific Rim than for I Am Legend?

I did do some reading and realized that I might have messed up on how I encoded my MP4 files. For instance, in the I Am Legend MP4 file, I obviously did the AC3 passthru for the audio. However, I noticed after a while some of my MKV files had DTS-HD and so I selected DTS-HD Passthru in Handbrake thinking that whatever that was would just be available for me to play on the other end. I don’t really understand what AC3 means and whether I can enable the 7.1 surround experience by encoding with Handbrake. Is Plex only able to Direct Play AC3? Will and AC3 encoding preserve the 7.1 sound. I realize that part of that question is maybe for Handbrake but I am hoping someone has some answers. I am bummed because it has taken my a week to encode my remaining BluRay disks and I might have to redo that effort. Here is my Handbrake audio settings just in case it helps.
Handbrake audio settings

I don’t know the Roku, but I doubt it can play DTS HD-MA audio. This is a lossless audio codec. 8 channels of high quality, losslessly encoded audio are taking up a lot of bandwidth.
And if your server has to transcode it during playback to the AC3 format, it puts a significant burden on your server’s CPU.

You might get better results if you tell Handbrake to convert the audio to AC3 in the first place.

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