Combining bash % with xargs %

This article says you can use a % syntax to remove file extensions:

$ s=a/b.mkv
$ echo ${s%.*}
a/b

How do you combine the % syntax with the % in xargs to achieve the desired result?

$ echo a/b.mkv | xargs -I % echo ffmpeg -i % (INSERT MAGIC HERE)
ffmpeg -i a/b.mkv a/b.mp4