For DVD, optical or coaxial is preferred over analog output because the AVM20 has much more robust audio processing capabilities than any disc player. To tell someone that optical is acceptable (much less preferred) for SACD and DVD-Audio is undeniably wrong, however, because optical and coax are either restricted or outright disabled when playing those formats. You cannot transmit SACD audio via optical or coaxial digital connections. The format is not analog - it is digital and uses DSD as its data format - but the copy protection imposed by Sony forces use of analog outputs or an approved (secured) digital connection that also has enough bandwidth for multichannel lossless audio, which is limited to FireWire (IEEE-1394), HDMI, and a couple proprietary connections.
I had to search for a while to find a rear panel picture of the DVD-2900, but I did confirm that it has a multichannel analog output. You will need to use that for SACD and DVD-Audio (although DVD-A will provide a downmixed stereo signal via optical and coaxial). For DVD and CD, you're probably best off sticking with that optical or a coaxial digital connection.