Formatiphobia: The fear of industry-induced format mayhem...

Blu-ray does use uncompressed PCM, but that usage will fade (is already fading) because this was done solely in reaction to the dreadful lack of onboard decoding in the first generation of players. There are three new processing modes that can be offered on Blu-ray and HD-DVD: Dolby Digital Plus, Dolby TrueHD, and DTS-HD (either plain HD or HD Master Audio). All three can be output in a few different ways: decoded internally by the player and output via multichannel analog, decoded internally by the player and output as multichannel PCM via HDMI v1.1 or higher, and output as a raw bitstream via HDMI v1.3. Of those three, all but DTS-HD Master Audio can be decoded by at least some existing players. At present, all HD-DVD's are mastered in such a way that they must be decoded internally by the player, so that third option isn't really an option with those discs. HDMI v1.3 is not required for these formats.

Traditional Dolby Digital and DTS can be passed via HDMI, but it works exactly the same way that it does over optical or coaxial digital audio cables. The same is true of PCM stereo from CD's.

SACD can be passed via a couple digital connections: IEEE-1394 (also called FireWire and iLink), a couple proprietary formats like DenonLINK, and HDMI v1.2 or higher. There are some players that will convert the DSD bitstream to multichannel PCM and push it over HDMI v1.1 connections.