In the mid to late 1990s many higher-end AV receivers included the demodulator circuit specifically for the LaserDisc players RF modulated Dolby Digital AC-3 signal. By the late 1990s with LaserDisc players and disc sales declining due to DVD's growing popularity the AV receiver manufacturers removed the demodulator circuit. Although DVD players were capable of playing Dolby Digital tracks, the signal out of DVD player were not in a modulated form and not compatible with the inputs designed for LaserDisc AC-3. Outboard demodulators were available for a period that convert the AC-3 signal to standard Dolby Digital signal that was compatible with the standard Dolby Digital/PCM inputs on capable AV receivers. Another type marketed by Onkyo and others converted the RF AC-3 signal to 6-channel analog audio.
What competition caused LaserDisc sales to decline?
DVD's growing popularity