Here's the second part to our ongoing series on how to get files up and running for your new Apple TV 2G. We quickly realized that getting everything formatted into a language that iTunes understands wasn't going to be easy (when it really should be). After trying out over 15 different software solutions that try to address this issue, we've finally settled on a few top pickings for both Mac and PC users.
Given you've already extracted your MP4 file and have extracted the subtitles from your Blu-ray or DVD into SRT format, you can utilize tools such as Subler (for Mac) or MP4Box (for Windows). With either of these tools at your disposal, you can load in, remove, set languages, and "mux" (a term used for placing video into a video container) the video together into a single MP4 file. When finished, just load it into iTunes and there should be an option for you to pull up the subtitles under iTunes preferences/Apple TV Options.
Update: It appears MP4Box embeds it in a way that Apple TV doesn't understand. If anyone knows a way around it, let us know!
Now, if that doesn't work, you can resort to other software that pretty much automates the entire process of converting entire files into different formats. Tools like Handbrake (for Mac and PC) are perfect for this, but often takes 3-4 hours to complete a single 2-hour movie.
If you're okay with hard coding the subtitles right into the video itself, Submerge (for Mac) is a good software package that does it quite well. You can even stylize the font styles to your liking.
Finally, FastMKV2MP4 (for PC) may not have the most original name out there, but it delivers in performance. Because it doesn't re-encode anything really, the process runs through your entire movie MKV collection within minutes. The install process is a bit convoluted for now, but once they get the kinks out, it may be a pretty great tool to have if you've somehow magically stumbled on a load of MKVs.