Confirmed, it is not 5.1 Dobly Digital surround, it is old-school matrixed Dolby Pro Logic, which by today's standards is crap. Pro Logic sounded good about 15 years ago, but today it is hopelessly outdated. I'm amazed to see a new service offer it, especially from a company supposedly pushing advanced technologies such as AAC audio and HD video. QuickTime itself is capable of multichannel audio, and since eventually everything should be coming off the iTV box (which could have had AC-3 hardware decoding built-in), I'm not sure what they were thinking. I have multiple problems with the iTunes video service, but the lack of modern surround sound is a deal-killer for me right off the bat.