With DVD, there were two main types of surround-sound formats, Dolby Digital and DTS. The goal of these formats was to take raw surround-sound audio--which is too large to fit on a DVD--and compress it so it fit on the disc. Both formats use what's called lossy compression, which means that some audio information is thrown away in the compression process. It's not a perfect solution, but it's done in a way so that you (hopefully) won't notice the missing information.
With Blu-ray, there's even more space available, so both Dolby and DTS have created new soundtrack formats with the aim of throwing away less information and therefore improving audio fidelity. There are five new soundtrack formats you can expect to see on Blu-ray.
Blu-ray soundtrack formats compared
| | Dolby Digital Plus | Dolby TrueHD | DTS-HD High Resolution | DTS-HD Master Audio | Linear PCM |
| Bit rate | 6.144Mbps | 18Mbps | 6Mbps | 24.5Mbps | 27.6Mbps |
| Bit depth | 24 bit | 24 bit | 24 bit | 24 bit | 24 bit |
| Sample rate | 48Khz | 96Khz | 96Khz | 96Khz* | 192Khz |
| Channels | 7.1 | 7.1 | 7.1 | 7.1 | 7.1 |
*192Khz on stereo sources
All listed specs represent the maximum a format is capable of
Dolby Digital Plus: Like standard Dolby Digital, Dolby Digital Plus uses lossy compression to shrink the size of the audio information. However, it outdoes standard Dolby Digital by supporting a higher bit rate (6.144Mbps vs. 40Kbps) and more channels (7.1 vs. 5.1).
Dolby TrueHD: The major innovation of Dolby TrueHD is that is uses lossless compression. That means it's still able to compress the raw information to a smaller file size, but it does so without throwing away any information. It offers both a higher bit rate and sample rate than Dolby Digital Plus, to produce overall audio quality that's theoretically identical to the studio master. That also means it should sound identical to a DTS-HD Master Audio soundtrack, which also uses lossless compression.
DTS-HD High Resolution: DTS-HD High Resolution is the step-up over standard DTS, and also uses lossy compression to shrink the size of the audio information. It outdoes standard DTS by supporting a higher bit rate (6Mbps vs. 1.5Mpbs), higher sample rate (96Khz vs. 48Khz), and more channels (7.1 vs. 5.1).
DTS-HD Master Audio: Like Dolby TrueHD, DTS-HD Master Audio uses lossless compression. It offers a higher bit rate than DTS-HD High Resolution, for overall audio quality that's, again, theoretically identical to the studio master. It should sound identical to a Dolby TrueHD soundtrack.
Linear PCM (LPCM): Linear PCM forms the foundation of all of these soundtrack formats. It's like the language all your home theater digital audio components speak. No matter what soundtrack format is used, it's eventually converted to linear PCM so your AV receiver can play it back. Some Blu-ray movies actually include soundtracks in linear PCM mode, which has some advantages--it's high quality and compatible with every Blu-ray player on the market. The downside is that LPCM takes up a lot of space on the disc, which is why most disc makers opt to use either a Dolby or DTS soundtrack format.
How much better is the sound?
While there's no denying that the specs of the new high-resolution audio soundtracks are superior, it's worth pointing out that there are diminishing returns to improved audio quality. In other words, don't expect to hear a tremendous difference over standard Dolby Digital and DTS soundtracks unless you have a high-end audio system--and even then, expect the difference to be relatively subtle. Even the experts have trouble hearing the differences in ideal environments.
Onboard decoding vs. bit stream
Like we mentioned before, linear PCM is essentially the universal language for your home theater components. That means if you want to listen to, say, a DTS-HD Master Audio soundtrack, it needs to be converted to linear PCM first. This process is usually called decoding, and it's performed either in your Blu-ray player or AV receiver. Let's take a look at the two options.
Blu-ray player with onboard decoding: If your Blu-ray player can decode Dolby TrueHD or DTS-HD Master Audio, it's said to have onboard decoding for that format. That means the player itself converts the soundtrack to linear PCM, which it can then send to a compatible receiver over its HDMI output. Blu-ray players with onboard decoding can also output soundtracks at their full resolution over multichannel analog outputs, if the player has such outputs.

The Sony BDP-S550's 7.1 analog outputs can transmit Dolby TrueHD and DTS-HD Master Audio soundtracks in their full resolution to older non-HDMI receivers.
AV receiver with onboard decoding: If your Blu-ray player doesn't have onboard decoding, it may have bit stream output capabilities. What this means is that it can pass, for example, a Dolby TrueHD soundtrack to a compatible receiver without doing any decoding. The receiver is then responsible for decoding it to linear PCM, which means the receiver needs to have onboard decoding.
If you're still confused, check out the AV receiver portion of the "What Do I Need" section to understand exactly what your home theater needs in order for you to listen to the new high-resolution audio soundtracks.
One last point: contrary to what you might hear elsewhere, there's absolutely no sound-quality difference whether the decoding takes place in the receiver or the Blu-ray player. The common analogy is to "zipping" a file on your computer; it's the exact same file if you unzip it on another computer. The only real difference is that if you use onboard decoding on your Blu-ray player, you won't see the "Dolby TrueHD" or "DTS-HD Master Audio" lights on your receiver. That's because the receiver only knows it's receiving a linear PCM signal; it doesn't know how that linear PCM signal was previously compressed.
What logos should I look for?
Generally, you can identify the capabilities of a Blu-ray player or AV receiver by checking out the logos on the unit. This isn't a foolproof method--we've seen some products mislabeled--but the idea is that a product won't "earn" its logo unless it has the capabilities indicated by the logo. (If you want to be absolutely sure about a product's capabilities, try checking out its user manual online.)
Dolby: Dolby certification is pretty straightforward. If the product can decode Dolby TrueHD, it has a Dolby TrueHD logo; if it can decode Dolby Digital Plus, it has a Dolby Digital Plus logo. If it can't decode either new Dolby format, it will feature the standard Dolby Digital logo. There were some earlier products that featured the Dolby TrueHD logo that could only decode the format in stereo, but those are rare now.

The logos on the outside of a player can be helpful, but examine them closely, as they often look similar.
DTS: DTS certification is more confusing. If the product can decode DTS-HD Master Audio, it has a DTS-HD Master Audio logo; if it can decode DTS-HD High Resolution, it has a DTS-HD High Resolution logo. The logos look similar, so make sure you double-check. Sometimes you'll just see DTS-HD, and that usually means it's capable of decoding DTS-HD High Resolution, but not DTS-HD Master Audio. If it can't decode either new DTS format, it will feature the standard DTS logo.
DTS also has a DTS-HD Advanced Digital Out logo, which indicates that a Blu-ray player can output DTS-HD Master Audio and DTS-HD High Resolution in bit stream format to a compatible receiver. Again, the logo looks similar to other DTS-HD logos, so double-check the logos before you buy.