When we got our first DVD player I kept hearing about external dolby digital decoders. They talked like these were not built into the receiver (what I read said you might have to buy one if your receiver can't decode the signal).... Do these exist, and would there be ANY benefits in using them over a receiver or av processor?
Like all new electronic things, when Dolby Digital was new in home theatre, it was expensive. And, like all new things, not everyone would need it right away, or want to pay for it right away. Consequently, in the early days of Dolby Digital in home equipment, many receivers were "Dolby Digital ready", which simply meant that they had a set of "5.1" channel analog inputs to accept the signal after it was decoded by an external decoder. So, those who wanted it could get it when needed, and those who did not, need not pay for it. Such decoders were expensive at the time, and usually worked well. However, like almost all established electronic things, Dolby Digital circuits are cheap now, and are included in most (perhaps all?) surround receivers these days. So, for most people, there is absolutely no point in buying an external Dolby Digital processor. I say, "for most people", because there are a couple of sorts of people for whom buying a used processor might be worthwhile. First, it might be reasonable for someone who has an old "Dolby Digital ready" receiver (or separates) that they like very much (though they might be better off buying a new receiver, but this will depend upon budget and exactly what the old equipment is that is so well liked that one wants to keep it). Second, if one still has Laserdiscs, and one wants to be able to play Dolby Digital from them. Laserdiscs took a special processor for Dolby Digital, and it is not included on most receivers today, but was included on early Dolby Digital decoders, as it was the "standard" home source for Dolby Digital encoded material when it first came to home equipment. (I won't bother going into the technical details of this special processor presently; anyone interested in the subject can do a search for Dolby Digital demodulators and find out about such things.) This, by the way, is why I have a separate Dolby Digital processor, so I can hook up my Laserdisc player's Dolby Digital output, and use the demodulator in it to send a regular digital signal to my relatively new Yamaha RX-V2700 receiver to decode the Dolby Digital signal. I could use the separate decoder to do the complete decoding if I wanted, but it does not do DD-EX, and my receiver has an automatic setup, which is easier than setting the levels and such manually (which I would have to do with the separate processor). If I did not have Laserdiscs, I would not bother with a separate DD decoder.
Since most people have no reason to buy a separate DD decoder, they tend to go cheap on eBay. Probably, most of the people buying them want them for the demodulator for their Laserdiscs, but that is a guess on my part.