… inside the container is a codec, specifically MVC which is an amended h.264 compression and the SoC in the WD TV’s is unable to decode this codec.
I agree with thie statement 100%. But I never suggested that it should decode the MVC stream. In fact, I want it to ignore it entirely.
This seems to be the source of a lot of confusion. There are 2 distinct video streams inside the MKV file. A “Base” stream, which is the same stream found on a standard Blu Ray 2D film (identical, bit-for-bit). It then suppliments this stream with a second stream (MVC) which gives 3D players the extra information to create a 3D image. It was done this way specifically to provide backwards compatiblity with existing non-3D Blu Ray players. So, if all you want is a 2D movie, then the MVC stream can be ignored entirely and the standard stream played back.
See this explanation direct from Sony, specifically paragraph 2.
As it stands, it is not detecting the AVC stream properly inside the MKV file. I agree that the WD TV software is clearly not peroforming the decoding, and will be bound by the limits of the current hardware for its lifetime. But, I suspect the software is detecting file contents and formats, and then sending the audio and/or video streams to the SoC with an explicit system call. The SoC then takes care of performing the appropriate decode process, having been given direction by the software as to which codec to apply.
I could be totally wrong. It could also be throwing raw files at the SoC and letting it sort everything out itself, but that would surprise me. Reading file attributes and metadata is typically the responsibiltiy of the software layer. Rendering/decoding specific information is the responsibility of the hardware layer. For instance, the software layer would not typically say “play this file”. It would say, “You will be playing an audio stream. Here it is, and it’s format is MPEG Layer-3”. Or “You will be playing a video stream and an audio stream synchronously. Here is the video stream, and it’s format is H264 AVC. Here is the audio stream and it’s format is DolbyTrueHD.” Hardware is very good at performaing specific tasks, but it usually requires equally specific direction. That’s where the software comes into play.