Originally Posted by exojam
You may very well be correct on that. I was doing some quick looking around since I have never seen DTS on a 360 game. I did run across the below information (which does mention movies) so I guess we will see. Not a deal breaker at all for me but DTS would be nice.
Playback of DTS (Digital Theatre Surround) 5.1 media (such as movies) by passing the encoded DTS digital bitstream to an external DTS decoder
"Sony's PlayStation 3 and Microsoft's Xbox 360 are capable of DTS decoding and output via TOSLINK or HDMI as LPCM. However, HDMI output on the Xbox 360 is only found on the "Elite" model and newer models available since mid-2007, with the release of the Falcon chipset."
It's a low level system thing. The Dolby digital encoder is at the OS level, capable of mixing in XBL chat voices, notifications, etc. There's no DTS encoder that I know of on the 360.
I'm sure it can pass through a pre-encoded DTS stream from a DVD, but it's incapable of encoding one in realtime.
PS3 is usually capable of passing an uncompressed 192khz/24 7.1 signal over HDMI. The 360 could probably do the same if they ever update the OS to allow it.