Ok After some fiddling using a specific Flac file Ive noticed some things. One: When tversity transcodes said flac file to pcm playback starts almost immediately and continues while the file was still being transcoded which took 3 minutes till tversity said transcoding was successful. Some other test files were much faster. (this was on the 360). Two: When tversity transcoded the same file to mp3 it took 26 seconds and playback would not start until Tversity reported transcoding was complete. The file appeared broken in the menu as well immediately after initial playback attempt. (this was on ps4)
On other FLAC files tested on the ps4. on initial playback attempt tversity would try to start transcoding but playback wouldnt start on ps4 and it would abort/pause the transcoding and the file would appear broken in the ps4 media player.
However after two or so fast retries transcoding would resume and complete then the file becomes playable on the ps4.
So my guess is for some reason either the ps4 or tversity 3.8 doesnt want to start streaming incomplete mp3 files....
I also noticed that when it comes to playback in a folder filled with FLAC or ogg files Tversity tries to transcode several files at once instead of just the selected file. The 360 doesnt have a similar folder view for audio so I dont know if this is normal behavior or not. The last thing that I noticed was that flac to PCM required quite a bit les cpu on this older machine than FLAc to MP3. Some thing like 15 percent CPU to 75 percent CPU. Its an older processor tho so there's that. I hope this info is useful
EDIT: As a quick test I set transcoding to always on and its seems that for me at least nothing will transcode on the fly to the ps4 video or audio save for video files that were supported natively anyway. Any other video files would not start on the ps4 and tversity would say transcoding suspended. Audio files behave much the same tho i guess transcoding from mp3 to mp3 might be a little weird. All of this works as it should on my 360 when set to always transcode. Im using the K lite mega pack for codecs as I Always have