I’ve been converting videos in order to watch on the Apple TV. There are numerous advantages to having a movie collection in iTunes, some of which are the vastly lower power consumption of the Apple TV vs a PlayStation 3, the lower noise (no fan in the Apple TV) and the ability to have cover artwork, genre, descriptions and keeping track of which movies you have and haven’t watched.

The holy grail of converting the videos is being able to get an MKV that has MP4 video and NOT have to transcode the video stream. Transcoding the video stream is needlessly complex, takes far too long for my liking and reduces the video quality by introducing a generation loss.

Through the first of the following two utilities (MP4Tools), I have been able to achieve my goals. By using the second utility featured below, I am able to make a converted video in iTunes look “just like a bought one”

MP4Tools – Converting Container Formats

Download, and register MP4Tools. It’s something like five bucks, and is money well spent.
http://www.emmgunn.com/mp4tools/mp4toolshome.html

It will convert from mkv, mp4, ogm and avi into MP4 videos. It can transcode video from non mp4/h.264 video streams, or if it’s already mp4 video, it can do passthrough (fast and no loss of quality)

It can also transcode the audio so it’s compliant with the MP4 spec.

Once it’s done, you can drag the output straight into iTunes. In iTunes you can add some metadata such as title, show, season, episode and cover artwork.

Subler – Control over your metadata

If you want more control over the metadata (in particular, being able to tag content as HD or not) then use Subler
http://code.google.com/p/subler/

With this you can mux in subtitles, or alternative soundtracks, add cover artwork, add short and long descriptions and tag content as being HD (720 or 1080) or SD. Subler also lets you save presets, so if you’re converting a whole TV season, for instance, you can fill in the common metadata (including cover artwork) for the season and then apply it to each episode in turn.

So you don’t have to go through all the research I did, here’s what you want to end up dropping into iTunes:

In MP4 Tools, set the compatibility for Apple TV

Make sure the video stream is (preferably) H.264 although if it’s MP4 it will work (although technically this is out of spec)

Make sure the audio stream is AAC.

If you want surround sound (and even if you don’t have a surround receiver now, you probably will at some stage in the future) you want two audio streams – one being 2 ch AAC and the other being the original 5.1 AC3 stream from the MKV (AC3 is Dolby Digital, not to be confused with AAC)

Technically this file is out of spec (having an audio soundtrack that is not AAC in an MP4) however this is how Apple do movies on the iTunes store and have surround sound.

If it has a 5.1 ch AAC soundtrack, you will not get surround sound on most equipment. If this is the case, you will need to transcode the sound to 5.1 AAC and then add a 2-Ch Track (there’s a checkbox for this in MP4 Tools)

Recommended Settings

In general the settings for MP4 Tools will be:

• Device: Apple TV
• Video: Pass Thru (as the video will most likely already be H.264 or MP4)
• Audio (if the MKV has a AC3 5.1 soundtrack): Pass Thru + Add 2-Ch. Track
• Audio (if the MKV has an mp3 soundtrack): AAC (2-Ch.) 160kbs
• Subtitles: Mux (soft)

It then takes just a few minutes to convert a movie-length MKV to MP4 with no loss of quality.