In the home theater market, AC-3 and DTS are close in terms of audio performance. Digital Theater Systems (DTS) is a family of lossy formats designed for the efficient encoding of surround sound, originally developed to support motion picture presentations in theaters. This Web page provides general, introductory information about the whole family.
Created in 1993 for the soundtrack of Steven Spielberg’s blockbuster film Jurassic Park, DTS surround sound quickly made its way onto Laserdiscs and then ultimately to DVD in the mid-1990s as a popular alternative to Dolby Digital. DTS, like Dolby Digital, is a lossy (compressed) surround sound format capable of discrete 5.1 and 6.1 channels of surround sound. DTS surround can flow via a standard digital cable unlike today’s higher-resolution formats that require an HDMI cable.
DTS was the audiophile’s choice for music surround sound in the pre-DVD-Audio days. DTS Entertainment, the company’s own record label, licensed many music titles, but Napster-inspired fears of piracy of higher-resolution music made getting A-list records nearly impossible. Ultimately, DTS turned its attention away from selling and promoting music.
Most AV receivers and preamps can decode DTS surround tracks from legacy formats like DVD and even Laserdisc for those who still have the player and the specialty discs.
With the advent of Blu-ray, DTS released new high-res and lossless formats, DTS-HD and DTS-HD Master Audio.
More info can be found is this page.