Is there a way to convert .m2ts videos to .h261 format.
Converting Blu-ray BDAV Video Files directly to H.261 Videos (.m2ts to .h261 conversion) is certainly possible, and should be quite straightforward.
You can use one of several video editing programs or conversion tools, such as FFmpeg or Freemake Studio Converter, which are capable of converting .m2ts to .h261.