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Phil So if I understand this correctly, if you use optical cable, the DAC's etc on the DVD player do not matter (quality, resolution etc)??
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True, the DACs don't matter; you aren't using them. But everything
else matters: transport, clocks, digital signal processing, power supply stability and noise, optical or coax transceivers... all can contribute to bit errors, jitter and skew that result in deterioration of audio and video performance.
All digital-to-analog conversion in my system is done by my pre-pro, but I still opted for a mid-priced DVD transport (Sony 9000ES, MSRP $1800) because the differences between it and lower priced players were audible and visible.