If it’s transcoding then that’s a server error most likely saying it doesn’t have enough memory to support live-transcoding. Try and force direct-playing by changing settings or as someone else suggested, use Infuse with direct-mode which avoids transcoding.

Don’t listen to people saying not to use the ethernet port, recent ATVs have good gigabit ethernet ports and I’ve measured good performance on them in the past and I suggest the person saying that mistakenly believed you had an actual smart TV, not a device like an AppleTV.