That is true but, it's not the same as the true format. I do not even bother with any of those what I call phantom formats. For whole year I could not figure out how to unlock the lossless modes but when I did I realized the true value of Dolby true HD, Dolby digital 5.1, 7.1 DTS Master HD. If the output source cannot produce these formats I just have the default set to all channel stereo for any PCM format.
I no longer even touch any of the format modes in the receiver. The receiver will automatically sense what is being output from the source. The only time I need to set any formats is on a DVD that offers multiple formats. As stated above you can find these formats in languages when inserting the DVD after it loads and after the trailers are finished. Yes, you will need a blu-ray player with HDMI cabling.
For the newbies read you manuals for all your equipment 10x if needed and know your menus. There are also settings that need to be selected on the blu-ray when setting it up for the first time. Once you set it up you can set it and forget it. The receiver will do the rest. After that you will need to balance the speaker system to optimize listening for these lossless modes. With that the only thing I usually touch from time to time is the bass setting when I run the computer into the LCD for some reason the booms a little louder. For the computer I use a toslink cable. For all the rest of the equipment with video I use HDMI cables.
Hope what I wrote helps some of you. It took many hours of reading and selecting the menu to figure it all out. Now there is no need to mess with the receiver or the blu-ray. It's plug and play. You do not need the most expensive equipment to achieve this either but it will need to have HDMI inputs and outputs and support these formats. Don't sweat it if you do not have a 7.1 system either. I have found only 1 DVD so far that supports the 7.1. A 5.1 system sounds awesome too.
On a 7.1 system running in 5.1 format the side speakers will only be working and the rear speakers will be turned off. I did not like this because I wanted more separation. So I put banana plug on the speaker wires and when running in 5.1 format I switch the rears speaker so they run on the side speakers output. This gave me the separation I wanted from front to back. If there is ever a movie in 7.1 which 99.9 percent of the time there is not I would just switch the banana plugs back to where they belong. My equipment is very accessible. No big deal. Once you have everything working you will stop messing with the equipment and begin to really enjoy some movies. It took me over a year to figure things out because nobody could help me. Then I found this site and the key answers I needed about formats helped me finish it off. Sorry for the long post I just want to try to help out with the basics. Danny