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Maybe transcoding won't be needed eventually for a majority of users ? A lot of media right now exists in h264 which newer devices can anyway play. Since AV1 has broad industry support, it might be also become ubiquitous.

Most of my transcoding usage in Plex isn't for a target codec or target resolution, but for a target bitrate.

I'm pretty sure this is still a trial and they will eventually charge for it. I seem to remember reading something like that when it was first announced.

Perhaps they transcode to multiple formats/bitrates locally before upload?

That's not the case, and it would be utterly unusable for 90% of users.