The HDMI (High-Definition Multimedia Interface) is, in essence, the Digital Visual Interface successor and it is backwards compatible with single-link DVI digital video. From the consumers’ point of view, this means that a DVI to HDMI cable can be used with no signal loss and the same applies when HDMI to DVI adapters are used. The DVI-enabled sources can be connected to HDMI-enabled HDTVs and the video will be displayed perfectly, and in most cases, DVI-enabled TVs will display video from HDMI source as well. Exceptions can be encountered since the DVI –D displays by definition do not have to support High-bandwidth Digital Content Protection and some models might not display video from an HDMI source. In addition, some of the older DVI-equipped personal computers do not support TV video formats and can be connected to PC monitors only, regardless of the used cables. To make the matter even more complicated, not all DVI and HDMI interfaces support High-bandwidth Digital Content Protection (HDCP) and since HDCP protected content might require both the DVI and HDMI devices support it, problems could arise.
When it comes to audio, HDMI carries digital video and audio, but DVI carries audio only and connecting a DVI-source to HDMI display or vice versa could bring a number of compatibility issues. Most devices would have a separate audio-only output, which provides a simple workaround since the HDMI to DVI cable could carry the video and the audio could be carried by a separate SPDIF or line-level analog link. Even though providing a separate audio link is not within the definition of HDMI and providing it is entirely up to the manufacturers, most of the HDMI devices, released in the past few years do indeed provide separate audio link. This makes it much easier for the consumer to use their existing devices with newly purchased ones and enjoy superb video and audio signal quality.
If you are building your home theatre from scratch, it makes more sense to buy all HDMI-ready devices since you will not have to worry about compatibility issues, HDCP-compliance, or separate audio links. However, if you have older DVI-enabled devices, in most cases, you should be able to easily connect and use them with newer HDMI-enable displays. Most of the latest computer video cards also come with TV-out, which is actually an HDMI output, but might require the use of SPDIF to enable carrying the audio and the video over a single cable.