This is something that I think I could fairly easily ameliorate if I could simply load-balance the application server by user, but historically (with Emby), I've not been able to do that due to SQLite locking not allowing me to run multiple instances pointing to the same config instance.
There's almost certainly ways to do this correctly with SQLite but if they allowed for using almost literally any other database this would be a total non-issue.
ETA:
For clarification if anyone is reading this, all this media LEGALLY OBTAINED with PERMISSION FROM THE COPYRIGHT HOLDER(S).
I don't quite get the "in software" part. I assume you mean that the video needs to be transcoded to h.264 on your server for their client to play it.
The way I mostly solved this is to ask people to install and use the native app (jellyfin-media-player or Android app) whenever possible, as it is compatible with more codecs.
You can also configure HW acceleration for transcoding, a decent GPU should have no trouble encoding a few h.264 streams in real time.
And lastly, you can play with distributed versions of ffmpeg, since Jellyfin calls ffmpeg. There are multiple options, such as https://hub.docker.com/r/bitwrk/jellyfin-rffmpeg (I never used it myself, though).