Would love if there's an equivalent in windows of this wonderful live wallpaper available on Android..
A Liquid Cloud LWP - https://play.google.com/store/apps/details?id=com.formisk.aliquidcloud.free
MKV and MP4 are containers. The container keeps the video and audio streams together. In VLC media player you can load the MKV and press Ctrl+J to see the type of video (Stream 0 codec) and audio (Stream 1 codec) inside it.
However, if the encoding (codec) of either the video or the audio stream isn't supported by your program, you have two options:
Option 2 will work with your current software, but you will lose a bit of image quality, because of the inevitably lossy re-encoding process.
Have you seen this? I just did a quick search and noticed there's a link in the 'How It Used To Work (Windows XP, Vista, 7)' part. Not sure if it helps any or if I'm even in the right ballpark though. Apologies if not.