Starting with DVD, we had to start using Toslink instead of the old trusty red and white analog cables, but with HD DVD and Blu-ray, it's no longer that easy. As great as Toslink is, it's only capable of carying 1.5Mbps of data, which limits you to either lossy Dolby Digital, DTS, or two channel PCM (uncompressed). So in order to take advantage of the new codecs, we have to leave Toslink behind and move on, or back depending on your configuration. Notably, there are a few ways that you can utilize the latest codecs, but the way you do it depends on your equipment and preferences. The two main options are to either decompress within the HD movie player or in your AV receiver. Assuming your equipment supports both -- although most do not -- you can join a thread at AVS to debate the merits of each, but since most folks don't have a choice, we'll cover the pair here.
The new codecs
The difference between the next-gen audio codecs is way beyond the scope of this feature, but to lay them out there to see if your player has support, here goes. Dolby Digital Plus (next generation of Dobly Digital, still lossy), PCM (uncompressed lossless, think CD) Dolby TrueHD (Dolby's lossless audio) DTS-HD HR (next generation of DTS, still lossy) and finally DTS-HD MA (lossless version of DTS). Basically DTS-HD MA, Dolby TrueHD, and PCM are all exact copies of the studio masters and arguably the same -- we're going to completely avoid the entire sample rate discussion here, sorry.
The new connections
You have three options for connectors that will allow you to take advantage of all the next-gen codecs; HDMI, HDMI 1.3, and discrete analog cables. The benefit of using HDMI over analog cables is obviously the digital transmission, but also, less wires as you can use one cable instead of six (5.1) or eight (7.1). In regards to audio, the advantage of HDMI 1.3 (preferably 1.3a to help solve possible lip sync issues) is its ability to carry compressed audio (aka bitstream) -- we'll get into why later -- rather than the previous version which could only carry uncompressed audio (LPCM).
Decompressing in the player
Home theater amplifiers don't evolve at the same rate as other electronics, and usually an amp that was good five years ago is still good today. So we understand that people can be hesitant to replace their AV receiver just to listen to the latest codecs. Luckily, most older receivers still have HDMI (pre 1.3) or discrete analog inputs (6 or 8). For this reason, having an HD movie player that can decode internally is advantageous, as it will handle the latest codecs and allow your older amp to just take the signal and amplify it for your speakers. The other advantage to decoding in the player is that if discs were authored with the advanced authoring method, the player can mix interactive feature's sounds with the regular audio from the movie -- things like beeps from the menus and directors commentary can fall into this category. If you decode in your AV receiver, you won't be able to take advantage of the additional sounds.
HD DVD options
A3 (DD plus and TrueHD) HDMI only
A30 (DD plus and TrueHD) HDMI only
A35 (DD plus and TrueHD) both, but 5.1 only
PS3 (DD plus, TrueHD and PCM) HDMI (This is correct, don't even think about commenting if you disagree)
Samsung BD-P1400 (All, but DTS-HD MA) both, but 5.1 only
Sony BDP-S500 (all codecs except DTS-HD MA) both, but 5.1 only
Pioneer BDP-95HD (all codecs except DTS-HD MA) both, but analog is 5.1 only
If it has HDMI or analog inputs, the chances are very good that it'll work when the player is doing the decoding.
Decompressing in the AV receiver
If you have the latest AV receiver with HDMI 1.3, you can set your player to send the compressed signal (aka bitstream) to it and let it do the heavy work. Both your HD movie player and your AV receiver have to support each individual codec though. So just because your player will output every codec via bitstream, doesn't mean your receiver can decode them. Although you can't take advantage of advanced authored movies, the advantage to decoding in the AV receiver is that you usually have access to more advanced sound processing. While equipment varies, in most cases the only way to take advantage of the auto level and delay adjustments is to decode in the AV receiver. If you are in a dedicated home theater this can be less important, but since many living rooms prevent optimal speaker placement, having the ability to adjust the level of a speaker or add a delay to simulate distance can be critical.
HD DVD options
A35 (all codecs)
XA2 (all codecs)
Samsung BD-P1400 (all codecs)
Panasonic BDP-BD30K (all codecs)
Pioneer BDP-95HD (all codecs)
Sony BDP-S500 (all codecs except DTS-HD MA)
Onkyo TX-SR605 and up (all codecs)
Yamaha RX-V1800 and up (all codecs)
Pioneer VSX-91TXH and up (all codecs)
Sony STR-DG2100 and up (all codecs)
Denon AVR-2808CI and up (all codecs)
So there you go, simple right? All you need is all new equipment -- that may or may not be clearly advertised -- connected with either HDMI or discrete analog cables, then an hour or so to read the manual, and you're all set. Seriously, even if you have the latest and greatest connected via HDMI 1.3, you may still have spend some time to ensure the player is set to output the optimal signal for your receiver and then decide what that signal is. Yeah we know, it's complicated, but at least we gave you a head start.
A special thanks to Tyler at Format War Central for helping figure this out.
These lists are not comprehensive and because of confusing terminology (and downright inaccurate documentation) it can be very difficult to tell what equipment supports what. So if you have first hand experience with any of our examples (or others) we'd love your help to make sure our lists are accurate.