Dolby True HD + Dolby Atmos 7.1 not working on LG TV App

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Now my brother has an Nvidia shield, and has tested both PLEX and JF, from what i understand he got both to work audiowise and without the subtitle transcoding.

Yeah, this is one of the only exceptions with regards to image-based subtitle formats. Kodi also supports image-based subtitles from what I've heard. Wish I had better news, but the subtitle issue will remain unless you opt for a different client that supports PGS without burn-in.

On the audio end...sounds like you're in a similar bind. I'd argue you're better off with 5.1 Atmos, but then you're not using your whole setup the way you want. Using an external client -- a Shield in particular -- would solve both problems.