Both HDMI and optical pass digital audio from one device to another.

Both are better than analog audio (the red and white cables). Both can pass multi-channel audio, like Dolby Digital. Both cables can be had pretty cheap. HDMI uses HDMI cables; optical digital audio uses a TOSLINK cable (optical fiber).

The biggest difference is that HDMI can pass higher-resolution audio, including the formats found on Blu-ray (Dolby TrueHD and DTS HD Master Audio) and Netflix (Dolby Digital Plus). These formats can’t get transmitted across optical.

In terms of simplicity, HDMI also passes video signals. So if you want just a single cable between two devices, HDMI is your pick.

Regardless of the gear you use, as mentioned there’s also no way to get Dolby TrueHD or DTS HD Master Audio with an optical connection.  But there is a solution.

No audio for Netflix on external speakers / analog headphones

The default digital audio format used by Youtube is 2 channels Advanced Audio Coding (AAC) where Netflix offers HD Audio as Dobly Digital Plus (DD+).

You will often find that Youtube audio works properly but Netflix audio does not when connected via optical digital audio.  Try this first to see if the problem is related to your TV, the AV receiver or audio converter, etc.

Why does Netflix not use an Audio/Video format similar to a DVD disc or BlueRay disc?

Netflix does not use any of these formats typically used for DVD/BlueRay:

• Dolby Digital AC-3
• Dolby Surround Pro-Logic (= Dolby Digital 2.0)
• Dolby Digital 5.1
• DTS
• THX Surround EX (= Dolby Digital EX)
• DTS-ES

Instead, Netflix uses the newer Dolby Digital Plus (DD+) encoding format as it offers better compression and thus uses less bandwidth to stream over the internet.

Note: You can toggle between 2 channel audio and 5 channel audio for some HD movies in the Netflix App, but this does not seem to affect situations where you have ‘no sound’ when using the Netflix App on your TV in combination with external speakers or a headset

Fact: Optical digital audio cannot pass Dolby Digital Plus (DD+) streams

Optical digital audio (S/PDIF) connections (optical and coax) can’t do DD+ because the S/PDIF protocol is not able to handle this format.

So your TV can internally decode the digital audio signal and play the analog sound over the internal speakers, but your TV cannot push this digital audio format over the S/PDIF connector.

If I change S/PDIF output from Auto or PCM, does this help?

Yes and no.  For high definition (HD) TV channels this works.  The internal decoder can decode the multichannel audio stream and send it over S/PDIF as a simpler digital audio stream (PCM).  However, Some Smart TVs will not output more than 2 channel audio streams via the optical digital output.

So if you experience ‘no sound’ on external speakers for some (HD) TV channels only, by all means change the S/PDIF audio settings (digital optical out) from “Auto” to “PCM”.  This will have the TV output a simpler format that cheap optical-to-analog audio converters can understand.

For internet Apps like Netflix or Youtube, these changes will not make a difference:

Youtube (AAC audio encoding) pass through over  S/PDIF  works fine.

Netflix (DD+ Dolby Digital Plus) pass through over S/PDIF does not work(!)

Summary

To get all TV channels audio working, you can change the TV audio setting for S/PDIF from “Auto” to “PCM audio”.  This however does nothing for “no sound” when using the Netflix App.

Suggestion: Buy an Apple TV and use Netflix on the AppleTV device?

• Yes, it does pass Netflix audio/video over HDMI to your TV
• No, it does not pass Netflix audio over S/PDIF optical audio out, same as on the TV
• It does not have an analog audio out connector for a headset.

Suggestion: Buy a Google Chromecast and use Netflix on the Chromecast device?

• Yes, it does pass Netflix audio/video over HDMI to your TV
• Does not have an analog headset connector.
• Does not have audio outputs.

Solution: Use an HDMI/ARC AV receiver (home theater receiver)

So what can I do if I want to solve the problem where there is no audio for Netflix on external speakers / analog headphones?

Fact: A HDMI digital interface will transport high bandwidth signals like Dolby Digital Plus (DD+) just fine.

A HDMI Audio/Video Receiver (also known as home theater set) will be able to receive Dolby Digital Plus audio properly, decode it and drive analog speakers or headset.

TV Netflix App + AV receiver connected over HDMI/ARC = output audio/video properly (using ARC).

If your smart TV is pretty dumb and does not come with a Netflix App, you can plug in a Google Chromecast dongle or AppleTV.  You will at all times require the AV receiver to decode audio for any external speakers or analog headset.

Note:

• AppleTV comes with a remote control and uses Airplay to talk to iPad or iPhone.
• Google Chromecast uses Google Cast to talk to a Google Android phone.
• If you want to use analog headphones, make sure the AV receiver has an analog audio headphones connector.

Suggestion: Instead of using an expensive AV receiver I could also use a cheap HDMI audio/video converter?

No.  Cheap HDMI audio converters cannot process Dolby Digital Plus; for this you require an AV receiver.

Conclusion

• Avoid “S/PDIF optical out” (in combination with Netflix).
• Use HDMI instead.
• Avoid cheap HDMI audio converters if you require Netflix audio on external speakers or headset
• Use an AV receiver instead.

When purchasing a smart TV there is no need to check to make sure it has a headphones jack.  Digital Rights Management has discouraged vendors from equipping smart TVs  with headphone jacks.  Modern TVs often no longer have analog audio outputs. They may just have digital audio output.