Hi Daniel,
I have used ffmpeg to convert .mts to .avi and then used videoReader in matlab.
I am using a win64 machine and the version of ffmpeg I installed is ffmpeg-20121105-git-c995644-win64-static.
I call ffmpeg from matlab to convert from .MTS to .AVI using
str=strcat('ffmpeg.exe -i "',MTS_file,'" -c:v copy "',AVI_file,'"');
s=system(str);