The DTS web site mentioned above says:
"The DTS Headphone:X experience first requires surround content to be encoded as a DTS-HD bitstream, with the room information embedded in the stream."
So it is a specific codec that needs to be supported in hardware, firmware, or software. Both when it is encoded and played back.
I have had a Beyerdynamic Headzone 5.1 unit for several years that processes DTS, Dolby Digital, and DD Pro-logic into a virtual 5.1 environment for headphones. It does that pretty well. DTS is the best quality.
Likely the h/w to support Headphone:X will have some sort of "emulation mode" to fall back to if the room information is not encoded. Few movies have the attention to sound design that would warrant this next step. As an amateur recording engineer I c