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I tried a lot of different combinations of settings but didn't notice much improvement. I mixed up hardware a bit in my host/client machines and noticed a significant change. Was using a 8370 + GTX 970 as host with 4670k as client and software decoding. Now using the 4670k + GTX 970 as host and 8370 as client. Steaming is significantly smoother. Getting 50-40 FPS in Black Desert Online. Not sure if this is just due to different processor or more to do with motherboards and other parts of the build.
There have been a few points the stream information overlay showed "slow decode" under the new client setup. I turned down graphics settings a little on the host and haven't seen this message again. I realize software h264 is nothing new but this does lead me to believe a dedicated GPU decoder may provide some improvement with quality (maybe just because of the higher resolution). The steam in home streaming knowledge base does suggest a dedicated GPU with 264 hardware decoding in the client and I stumbled across this thread suggesting hardware decoding can help (but they had a much worse processor).
https://www.reddit.com/r/Steam/comments/2mlex8/inhome_streamingbest_budget_gpu_for_hw_decoding/
Ultimately I will want to put an nvidia card in the client anyway just for the better driver support with linux. Even with a dedicated steam host server I will want to play games locally from my linux machine. I lost that ability when I moved my GTX 970 to a windows host to try out this streaming setup. With new card releases around the corner I will sit on it a bit - I am happy to see DX11 titles fully playable from my linux machine with in home streaming. Very cool.
(*imho^^)
As far as the client goes - I've been doing software decoding on the AMD 8370. I think this contributes to higher latency of display and a little worse quality. The red decode bar is certainly the largest metric when I view streaming stats on the client - varying between 25ms and 50ms usually. I was running into an issue where the software decoding on the linux client would spike much higher (display slow decode error and tank FPS to single digits on the client) - I've since found that changing the cpu frequency governor eliminated this problem.
Software decoding seems adequate at 1440p now but I plan to drop a GTX 960 in the client linux machine for hardware h264 decode since it seems like there is room for improvement. I plan to pickup a used card for ~$100 with all the new card releases now.