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Make sure your PS3 is set to linear PCM so you can have the PS3 do all the decoding. The receiver needs to be on "Multich" multichannel. Here are the settings that you need on the PS3 also these settings will allow the PS3 to decode uncompressed formats such as DTS master and Dolby True HD for Blu ray discs.
- Go to BD/DVD settings and make sure HDMI and optical are set to bitstream
- Go to Sound Settings then press the “x” button on the controller.
- Click on HDMI then click on manual settings
- Make sure Dolby Digital, DTS, and AAC all have check boxes.
- Don’t worry about the linear PCM formats leave those alone
- Go to the next menu by pressing right on the Directional Pad of the controller and press the “x” button to save the settings.
- Go to BD DVD Settings and make sure HDMI output is set to Linear PCM.
- Go to Sound Settings and make sure that HDMI is selected and set it to MANUAL
- Make sure that ALL Linear PCM settings have a check mark.
- Save your settings
- If you have these settings and all linear PCM’s checked please note that you will only be able to get Multichannel and Direct as your listening mode even if the PS3 is set to Bitstream but the PS3 will decode Dolby Digital and DTS on its own