It seems we can never have thread concerning the PS3 without a lengthy debate of decoding in the player vs. decoding in the receiver. Speaking as an electronics engineer with 30+ years of work in digital communictions, the PCM bit string produced by the decoder with the PS3 should be identical (in terms of the sequence of ones and zeros) to the PCM bit string produced by the decoder within the AVR. However, there is still some potential for the sound quality out of the speakers to be different, depending on what additional processing the AVR does in these two cases. One specific example is the LPCM as received by the AVR from the PS3 will have addition jitter on the bit timing (HDMI adds jitter) and some AVRs will buffer and reclock this incoming PCM to remove the jitter, and some will not. If the AVR does the buffering and reclocking there is no technical reason why having the decoding external to the AVR is inferior to having the AVR doing the decoding. Like it says in Post #1 it all comes down to the capabilties of the AVR for handling LPCM inputs.
Bottom line is if you insist on having a bitstream output for the lossless Dolby and DTS audio formats, buy a stand-alone BD player instead of the PS3. I don't see any need to discuss this further in this thread.
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