The easiest way to export AVCHD video from a high-definition (HD) camcorder to play on Apple TV is by importing the video files directly into iMovie, then exporting the file as an AppleTV format (H.264) file. If you have previously moved the AVCHD, .MTS video files off the camcorder, there is another way to convert them for Apple TV use.  Advanced Video Coding High Definition (AVCHD) is a new codec developed jointly by Panasonic and Sony to efficiently handle high quality video files for recording devices.  AVCHD now includes progressive scan and HD 3D, so expect it will be around a while.

Converting archived AVCHD video files

A more difficult task is converting old files no longer on the camcorder to the Apple TV format.  Since a Mac does not like to import a AVCHD (.MTS) file off a hard drive or memory card without the original file structure, these files must be converted in a program other than iMovie.  The best program to use for this task is called Handbrake.  Handbrake is an open-source program that is very useful for converting video files to iPod, iPhone, iPad, Android, and of Apple TV format. 

First download and install the Handbrake video converter program.  Handbrake is an open-source program and is available for free.  Once the program is successfully installed, launch the program.

Select the location of the .MTS video files

Video folder
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In the dialog box click the "File" header.  A pull-down menu will appear.  Point to the source of the .MTS AVCHD files.  Handbrake can look for individual files or a folder with multiple files.

Tell Handbrake which files you want to covert to Apple TV format

Set .MTS file location
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Select the AppleTV preset video settings

Select Apple TV 2 Preset
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On the right side under the heading "Presets", select the AppleTV 2 preset.  This setting is compatible with any AppleTV box version and will make the video run the best.  Different settings were tested for quality and speed and the Apple TV 2 format has the best video quality and runs without hesitating. 

Select MP4 video output file type

MP4 Video Output
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Under output settings container, select MP4.  Do not select MKV file.  AppleTV will not play MKV files.

Select H.264 Video Codec

Video codec
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Under the video codec settings, select H.264.  Also, make sure "large file size" is not checked.

Select files to convert

Select Files
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Pull down the "Title" dialog box and select the file to be converted to AppleTV format.  If you have more than one file to convert, you can batch process the files.  Select each file to convert, then press the "add to queue" button.  Once all the files have been added, select the "encode" button in the queue dialog box.

Remember that AppleTV is currently only set up to play video files from an Apple product.  Using this method, video files have been successfully played in HD quality from a Mac computer, iPod Touch, iPhone, and iPad.  These files were streamed in AirPlay wirelessly to the AppleTV using only the remote.