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Need some help deciding whats the best setup for my open layout.

I am trying to decide a couple of things
1. With my main receiver RX-A680 no longer has HDMI out and I am now using Optical. I know I am not getting the same sound quality because ATMOS and DTSX do not work with Optical. Would I be better off using my older RX-V667 that works but it doesn't have ATMOS or DTSX or should I get another ATMOS receiver?
2. Depending on question one where should I mount the ceiling speakers?
3. Depending on question one I was thinking about removing the side speakers on stands because of the annoyance of running into them and visually it is not pleasing and replacing them with another set of Micca's or just running no back speaker. Thoughts?

Sorry for all the questions...

Current Setup
Receiver: Yamaha RX-A680 (HDMI went out) Spec
Backup Reciever that works: Yamaha RX-V667 Spec
Side: Energy C-R1 Spec
Front: Energy C-5 Spec
Center: Energy C-C1 Spec
Back/Middle Ceiling: Micca M-8 Spec
Sub: Formula F-12 Spec



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The inexpensive thing is to swap out your bad AVR for the other one for now.
I would simply mount the surround speakers on the wall as they are designed for. This gets rid of the stands.
If you want to jump into Atmos, IMHO it's better to go in whole-hog and get four height channels. The Micca speakers are going to be "okay", but these Monoprice ones have an angled baffle that you can aim towards your ears, and cost a bit less too: Monoprice Caliber In-Ceiling Speakers, 8in Fiber 2-Way with 15° Angled Drivers (pair) - Monoprice.com
I am currently not seeing any 9-channel AVRs (ie: 5.1.4) below $1000 right now (after a VERY quick search). You can probably find 7-channel (ie: 5.1.2) under $500. The more channels you need, the higher the price, but you DO get more robust power supplies, more HDMI connectivity, much better room correction software, etc and many people find that worth the extra cost.
It all comes down to your budget and how you wish to proceed. Right now, to get the best out of your setup, I would swap the AVRs and mount your surrounds. That will be the biggest difference.
 
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