Cross-platform media player by VideoLAN, called VLC, has been rewritten from the ground up for watchOS 2. And on the iOS side, VLC comes with many new features.
VLC plays a variety of video/audio files in non-iOS-friendly formats without conversion, including MKV movies.
The app also includes support for multiple audio tracks with 5.1 surround sound and subtitle tracks. In addition, VLC for iOS has dropped support for iOS 6.1 and now requires an iPhone, iPod touch or iPad with iOS 7.0+.
UPDATE: The post originally stated that VLC is now available on the new Apple TV. Regrettably, that announcement was an oversight on part of VideoLAN, which has since removed mentions of the Apple TV app from their release notes.