for direct playing its usually better to have the files encoded as MP4 with aac audio. most devices will direct play this format. If its just playing to another PC/laptop then it will usually just direct play anyway aslong as the bit rate isnt too crazy high for your network to handle.
This. Check out MP4 Automator, it works great when tied in with your download client. Converts all files to MP4 and create a separate 2 channel AAC soundtrack (if the original was DTS or something incompatible with a client).
Basically, unless you have low bandwidth and are streaming externally it means nothing (99% of the time) will need transcoding. Works perfectly in my situation.