Bitstream setting-Why forced to choose DTS or Dolby?!

I believe that on the Xbox One the native game audio is NOT encoded and that because of the One's design (seamless switching, Snap, etc.), the Xbox is decoding all encoded audio (from TV, BluRay, etc.), mixing in the other audio from Snap etc., (re)encoding all of it using the format you select, then outputting.  It is not just passing through the source audio and cannot do so without compromising the Snap feature etc. Because of this need to (re)encode, it gives you a choice of formats for the (re)encode.

So stick with 7.1 uncompressed I take it.  Hmmmmm, this should be a simple firmware fix.

is it possible to choose dts for hdmi and dd for optical?

Could this be causing the lag I see and hear?

It's obvious on TV as you can see the lip sync is out. It's also obvious in menus, I can quickly move between tiles, stop and listen to the audio pulses catch up. I reckon it's 100ms behind.

Absolutey stick with 5.1/7.1 uncompressed over HDMI if you can.  It is not a simple firmware fix because, for Snap etc. to work as designed, the One must decode the Dolby/DTS audio to mix in the other sound sources. If your receiver has HDMI and supports uncompressed 5.1/7.1, why would you want it to reencode that uncompressed mix back to Dolby/DTS only to have the receiver to decode it again?  This extra step certainly could cause sync issues because each encoding or decoding takes time and processing power.

It seems to me that many folks here believe that Dolby and DTS are synonymous with surround/multichannel sound and that, if they don't see those lights or words on their receiver, they are not getting multichannel sound. This is simply not (necessarily) the case.  Dolby and DTS in their various forms are just codecs for compressing multichannel audio, similar to how MP3/FLAC/etc. are codecs for compressing stereo audio from CDs etc.

Because Id rather have my high end Denon receiver decode the bitstream automatically for any 7.1 or changing audio coding.  It should be sending bitstream for my receiver to do its work, but it comes over pcm already seperated with 7.1 uncompressed.  Not sure I trust the audio guts as much as my receiver.  Thats all.   Im staying with 7.1 uncompressed, BUT it should come across the other way.  Ps.  Ive never had any lip synch issues, and dont forsee it a problem.

Because Id rather have my high end Denon receiver decode the bitstream automatically for any 7.1 or changing audio coding.  It should be sending bitstream for my receiver to do its work, but it comes over pcm already seperated with 7.1 uncompressed.  Not sure I trust the ones audio guts as much as my receiver.  Thats all.   Im staying with 7.1 uncompressed, BUT it should come across the other way as full bitstream uncompressed.  Ps.  Ive never had any lip synch issues, and dont forsee it a problem.

I am speaking about hdmi, NOT optical since optical cant handle full bit uncompressed.

@WillyBurz

As GZA said, the Xbox One will decode all audio and re-encode it to DTS/Dolby anyway. By using uncompressed, that last (redundand) step can be avoided. So there is no way you can let your Denon do all the decoding. The Xbox One will decode all your audio in the first place in order to mix in all the UI sounds, even if you set it to bitstream out. See?

I'm with WillyBurz on this issue.  XB1 needs to output audio that is a fully native bitstream signal.  I've noticed a big difference in sound even when the my XB1 settings are set to output HDMI 7.1 uncompressed.  When watching TV, I noticed that I don't get the same amount of clarity and volume in my left/right and rear channels as I do when I pass the signal through the console and into my Denon audio receiver.  It irritates me a little that the audio receiver can't conclusively detect what type of signal it's getting too and it ends up generically identifying it as a "MULTI CHANNEL" source.

Because of the reduction of quality, I have opted to feed my TV signal directly into my audio receiver and fully bypass the XB1 console, but of course I don't have the same type of solution available for my gaming and Bluray usage.  MICROSOFT!!!  PLEASE FIX THIS ON YOUR NEXT UPDATE!!  QUIT FORCING US TO CHOOSE A TYPE OF BITSTREAMING!!  I WANT THE XBOX ONE TO OUTPUT WHATEVER IS ENCODED ON THE SOURCE MATERIAL!