If you feel this is totally wrong, make your case to LG and ask them to fix their code. Be aware that this sort of complaint is mostly from folk that are new to Smart TVs. Smart TVs are about something other than a media player. It shows.
As to the USB/LAN difference, that's been seen many times. I will upset you here as while I know a few reasons why, that will not fix it since it's in LG's code. There's also the matter of patents. Patents can cause all sorts of troubles like this.
Recap. It's LG's code, and patent issues. Nothing new is going on here.
I have a weird file-recognition issue with my LG UH668V Smart TV.
I have lots of video files, some recorded by myself and some taken from the internet or from other sources.
Most of these files are MP4 (HD and 4K). I also have some AVI similar files too. So a mix of 90/10 MP4/AVI
To play these on the LG TV I have two options; I can either copy the files I want to play onto a USB drive or flashdrive and plug it into the TV or, as I have a wired LAN (in which I have a number of NAS units holding all my video files) I can connect in to the TV and play files directly from my NAS drives that way. Option 2 obviously is the better option as I then don't need to copy to a USB drive what is already on my NAS drives, BUT.... there is a problem with the NAS drives option. First of all only ONE NAS can be recognised by the TV at any one time for some reason. I can switch off the one 'connected' to the TV abd switch on another, do a refresh and the new one will be recognised. But not while another NAS is on. However that is not my main issue here (I can stomach only having one NAS at a time 'connected' to the TV), the main issue is the TV's listing of files that are on a NAS drive. The TV will not list any MP4 files at all. Only the AVI files are shown and so only AVI's can be played. Now, using the first method and copying all the MP4 files to a USB stick/drive then plugging it into the TV then all MP4 files ARE then listed and can be played fine. So why can they be 'seen' on a USB drive but not on my LAN, even though all AVI's are? I have in fact tried renaming a few MP4 files to AVI and they then become listed (even though natively an MP4) and will play fine.
I could go through all my thousands of recordings on all my NAS drives to change the extensions to AVI but it seems the wrong way to do it and may mess up some files on other apps.
So why on earth won't the TV 'see' MP4 files on my LAN but will 'see' them on a USB drive?
Hope someone can help.