So I've been having this issue for a little while now but I've waited to test it with the latest public vesion of PMS.
I have PMS installed on a DS918+ with 16GB RAM, then playback on an Nvidia Shield TV, iPad, Android phone on the same network.
Whatever file I play without subtitles e.g. 4K, 1080p etc plays fine, even transcoding these files to different resolutions works fine.
CPU load also doesn't go above 40-50% and memory usage is low. (I monitor the Plex process in DSM on Synology - resource manager)
Yet, when I enable substitles either on 4K or even 1080p CPU I get a notificaiton on the playback device that the server is not powrful enough and then intermittent playback, actually more pauses than play time.
Here is the strange part, CPU usage in the latter scenario is however low. The Plex transcodding process stays at around 24-28%, and total CPU usage doesn't go above 40%.
What could be wrong? It's like there is a cap for the transcodding process in this case.