In a movie-theater environment, a Dolby Digital soundtrack is recorded straight onto a strip of film and read by the projector and translated into an acoustic signal which is then sent to the speakers in the theater. This is optically printed onto film in digital format, but an analog format is also recorded as a back-up or for use with projectors that cannot read a digital soundtrack. A DTS soundtrack is recorded onto a separate CD and uses time code to synchronize with the image track.
Because the DTS system uses a separate CD for its soundtrack, it can handle higher bit rates than a traditional Dolby Digital soundtrack. Bit rate describes the number of bits processed per second, and generally a higher bit rate indicates higher fidelity. A DTS system is typically played at a maximum of 1536 kb/s. A Dolby soundtrack will typically be played at 384 kb/s in a theater, the maximum amount of information a film frame can hold.
On both systems, a film's soundtrack must be compressed from its original format, which is too large for either system to process. This is especially important when formatting a DVD, which only has a certain amount of space. The DTS bit rate compresses its bit rate to half of its original quality, resulting in 768 kb/s. Dolby Digital can actually increase its quality on a DVD, reaching a maximum of 468 kb/s on a standard DVD and 640 kb/s on Blu-ray.
There are debates about which system can provide better perceptual transparency, or appear to be most faithful to the original sound created by film sound mixers. There are many factors that prevent a proper evaluation of this debate, but under ideal circumstances it is generally recognized that Dolby Digital is better at achieving sound that is comparable to a movie theater in the home, while a DTS soundtrack has higher quality in a movie theater that is significantly reduced on a home entertainment system.