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What's the major difference between them and which is the best one in terms of Audio quality ?
PCM is short for Pulse Code Modulation. It's an uncompressed, unencoded digital representation of analogue waveforms; it is the rawest form of digital audio. Each audio channel is represented by a number of samples that are equally spaced in time and are equally wide.
For example, a 5.1 surround sound system configured at 96Khz, 24bps will have six channels sampling a 24 bit value from an output buffer 96,000 times per second.
All audio is generated and manipulated in PCM. The .wav file is a storage format for PCM. The audio codec itself uses PCM when converting the digital samples into analogue values for playback through the speakers.
If you've ever looked at a .wav file and compared it to a .mp3 file or a .dts file containing the same recording you may notice that it is absolutely massive in comparison. This is a result of the lack of compression that PCM has. For audio sources that have entirely prerendered audio -- such as movies -- it makes sense to compress and encode the audio into a format more suitable for storage.
Let's calculate the storage space required for 90 minutes of uncompressed DVD quality audio.
6 channels * 16 bits per sample * 48000 samples per second * 60 seconds per minute * 90 minutes = 24,883,200,000, or 24.88 gigabits, or approximately 8.3 gigabytes. This is twice the capacity of a single layer DVD, and no video content has been included.
Dolby Digital and DTS are lossy digital compression algorithms that encode one or more PCM channels into a bitstream for storage, and then decode that bitstream back into one or more PCM channels for playback. Dolby Digital and DTS may encode that 8.3GB of PCM audio to ~800MB and suffer only a minor loss in quality.
Dolby Digital TrueHD, and DTS-HD Master Audio are lossless versions of those mentioned above. Unlike Dolby Digital and DTS, these two will decode to the exact same PCM signals that they were encoded from without any loss of quality.