Saikat:
Equipment that decode Dolby, DTS and other surround sound formats are called by different names. The most common is Preamp/Processor or Pre/Pro. Some companies also call them Surround Controllers.
Just like a 2 channel pre-amplifier, the Pre/Pro accepts inputs from a DVD or other sources, and processes both audio and video. Modern Pre/Pro can decode all flavours of audio codecs, including Dolby Digital Plus, Dolby TrueHD, and DTS-HD Master Audio via HDMI. These equipment come with multiple DSP chips to handle audio processing and digital-to-analog (DAC) conversion on multiple channels (upto 12 channels, I think). They also come with room acoustic correction methodology such as Audyssey. Some of these Pre/Pro also allow setting of individual channel to your liking by controlling the treble and bass. Some of them support multiple sub woofers.
Most of these Pre/Pro come with extensive controls mechanism. These include Ethernet for connectivity, RS-232C port for control, Infra Red Input/Output, and what are called 12-volt triggers. This is a simple mechanism by which you can turn an equipment on or off in conjunction with another. For example if you switch on a power amplifier connected by a 12 volt trigger to a Pre/Pro, the Pre/Pro will also power on immediately.
What about new formats? Various manufacturers follow different methods for upgrades. Some follow software upgrade methods by which you can download software and load it on to the Pre/Pro. Some companies make their Pre/Pro like a computer with slots inside. Every now and then they introduce a new processing board, and you plug that in in replacement for the existing board.
Some of the Pr e/Pro have the capacity to process for multiple rooms. In other words you could be watching a movie in your HT room, while someone else could be watching a TV program in a different room. This is becoming popular in the US and other countries, where all the TV connections and processing is centralised with such equipment and then distributed to various display and speaker units across the house.
Companies that make such equipment include Onkyo/Intergra Research, Anthem, Meridian, Theta, Classe, Emotiva, Lexicon, B&K, etc.
You need multi channel power amplifiers to work with with these equipment. In comparison, an AVR comnbines the job of audio and video processing and sound amplification.
As Amol has mentioned these Pre/Pro and the power amp combination are usually expensive. At the same time, through upgrades and other methods, companies such as Lexicon, B&K, Theta and other others promise to save your equipment from obsolescence.
Cheers
