PCM or Bitstream?

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My setup is like this:
PS4/Xbox/PC connects to TV by HDMI. The TV takes the consoles' sound to the Logitech Z906 by optical audio while the PC can go direct by 6 channel or optical audio.

Should I set the consoles and consequently the TV to bitstream (and if so, should it be DTS or Dolby?) or PCM. With bitstream the sound system uses the speakers the source requires, but with PCM it will use all regardless, unless you manually change it.

Which is better? I've looked this up but get conflicting answers that go over my head.
 
For sonic quality I like to keep my audio digital (optical) and let the external device do the surround decoding, but in your case that means you are relying on Logitech control as far as selecting what MODE to play. I don't know how good or flexible the Logitech controls are.

Doing it the other way around outputting directly to 6 channels affords you of more convenient control right on your desktop.

Whether dolby or DTS should be automatically selected by the source, you shouldn't have to do anything to it.

I know, I did not give you a clear, DO THIS answer but such is life, there are always gray areas.
 
Usually when you set your TV audio type you either choose between PCM stereo or surround sound. The processing will be done in the Logitech so choose the one that gives you surround sound.
The TV will pass the surround codec of the source. You would only change it if the speakers aren't compatible with the audio.
 

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My speakers say they support DTS and Dolby Digital. I couldn't get consistent sound out of them using my HDMI devices and my TV (so sound coming from the TV through optical) regardless of whether I picked Linear PCM (default) or Auto on the TV so I took the TV out off the equation by connecting the PS4 directly to the speakers, setting it to bitstream so the speakers use the speakers the source requires rather than simulating surround sound like before. Through the TV it kept cutting for a second every couple of minutes. However using internal speakers I had no problems. Sending audio from an internal app on the TV to the speakers had no issues either.

I returned another of the same TV for the same issue. Still don't know why the TV wouldn't play nice with the speakers