To achieve a home theater environment, you need the following:

First, you need a video source

1) DVD, HD-DVD, Blu-ray movies
2) HDTV from Over-The-Air (OTA) broadcasts
3) HD satellite TV or
4) HD Cable TV

You need a video source that gives you a sharp, vivid picture and Dolby® Digital audio. DVD is one way to achieve this. DVD has 480 lines of resolution. There are  thousands of DVDs with Dolby® Digital soundtracks, many of which feature 5.1-channel surround sound. DVDs can also include other formats, such as Dolby Digital EX 6.1, DTS®, DTS-ES 6.1, and DTS 96/24. HD-DVD and Blu-ray disc offer 1080 HD resolution.

Other video source options include DBS satellite TV or HDTV over-the-air. Both have Dolby Digital 5.1 audio. 

Second, you need a television

A 27 inch TV display screen is about the minimum for home theater. A 42 inch is better and a 50 inch is very impressive.

HDTV capability: You do not have to have the capability to display a high-resolution image, up to 1080 lines of resolution, but HDTV and HDTV-ready sets are a perfect choice for home theater. HDTV offers top picture quality and Dolby Digital sound. 

There are TVs using the cathode-ray tube technology, and they can provide a good picture, for DVD and HDTV as well as NTSC broadcasts. Increasingly however, there are many brands of flat-panel television, such as LCD sets and plasma, that have a fantastic picture, can be hung on a wall, and provide a much bigger display for your video. 

Third, you need an audio/video receiver with Dolby Digital decoding

In order to enjoy surround-encoded audio, you'll need an Audio/Video receiver to decode it. A/V receivers can decode multi-channel audio formats, such as Dolby Pro Logic II, Dolby Digital 5.1, Dolby Digital EX 6.1 or THX Surround EX™ 6.1, DTS, and DTS-ES 6.1.

A/V receivers also drive your loudspeakers, plus provide inputs and outputs for connecting your DVD player, VCR, digital satellite TV receiver, television, etc.  5.1-channel input jacks give you connection capability, some have 6.1 and 7.1-channel input jacks. A/V receivers also handle input and switching of music sources, and have an AM/FM tuner.


Fourth, you need Loudspeakers

Home theater is all about recreating the movie theater in your home and part of this whole experience is the tremendous sound you can hear from movies. With Dolby Digital 5.1 you need to be surrounded by speakers:
 
 1) center channel speaker for voice and on-screen action
 2) front left and  
 3) front right speakers for stereo soundtrack and 
 4) and 5) surround speakers for ambience and sound effects. 

Some A/V receivers allow you to connect two back surround speakers, which create an even more realistic 360º surround sound. See Surround Sound Formats.

Powered subwoofer
For booming bass, you need a subwoofer speaker. The subwoofer speaker is the ".1" in 5.1. Dolby Digital includes a dedicated low frequency effects (LFE) channel. The deep bass makes the entire sound experience feel fuller, more lifelike.

Choose speakers that are voice-matched to one another.  Speakers with similar tonal qualities will give you more consistent wraparound sound. Buying all of your speakers from the same manufacturer sometimes ensures you get matching qualities.

In addition, you need the proper cables and connections to hookup all the parts of your home theater.
See
• Audio/Video Connections and Home Theater hookup diagrams.
• See over 40 hookup diagrams.

  Televisions : : High-definition digital television.