Unfortunately, there are a whole list of issues that can cause this, and it's made worse by the lack of inexpensive HDMI 2.1 hardware out there.
It's not as easy as saying "buy X and it will work" (unless X is a whole new sound system).
If you do not need HDMI 2.1 support, the simplest and least-expensive option is usually to add an HDMI audio extractor between the console and the display.
There are currently no devices that can do this which support HDMI 2.1, and features like VRR potentially complicate matters. An HDMI 2.1 device may be capable of passing through a 4K120 signal, but not advanced features like VRR.
The reason you're only hearing left/right when selecting 5.1 LPCM is because HDMI ARC only has the bandwidth for 2.0 LPCM and the other channels are being dropped (frankly I'm surprised it let you select that).
ARC requires that you use compressed audio (Dolby/DTS) for 5.1.
The problem is that compression/decompression can add a delay to the audio, and some TVsāparticularly LG OLEDsāseem to delay the pass-through of Dolby audio as well.
DTS audio did not suffer from the same delay, but LG have dropped support for DTS in the CX models.
Even if you have a TV which does not delay the audio, some sound bars themselves have a delay when decoding it.
And some sound bars with wireless subwoofers/surround speakers may have an intentional delay so that the wireless speakers play in sync with the rest.
I find it frustrating that no review outlet seems to test audio latency for these devices. Many Atmos devices in particular have a noticeable delay.
eARC allows for 7.1 LPCM pass-through which should bypass the issues of ARC since there is no encoding/decoding, and
usually no delay on the pass-through.
Even the LG OLEDs which delay Dolby signals appear to have no delay, or a significantly reduced delay, when passing them through eARC.
But this requires the display and the sound device to both support the eARC signal. It's not backwards compatible.
If your display supports eARC, but not your sound device, there are eARC extractors like the shARC which can convert eARC audio to regular HDMI audio; but many people here have reported issues with the device in their setups - so it's not always going to be as easy as plugging in the device and having the audio work as intended.
Does the shARC support all HDMI 2.1 features like 120 Hz and VRR and introduce no lag? In my current setup (PS5 connected to receiver) I do not get 120 Hz support at 1080p on my LG C8, even though it should be supported. I know HDMI 2.1 is not needed for that, but is it future-proof?
It doesn't need to.
You connect the console directly to the TV, and the shARC to the TV's eARC port.
If your TV does not support eARCāand the C8 does notāthere's very little point in buying the shARC.
I know there is a big thread but wanted to ask a quick one - you can still pass video up through the Sharc? For those devices I have connected to my receiver.
No, it turns the display's eARC port to an HDMI audio output.
It does not pass video through to the TV, and you connect the output of the shARC to an input on your receiver - not the ARC port.
I'm using pcm for my setup and it seems like it's 5.1 to me. Directional sound is there while gaming and when I play a 5.1 test tone on my TV through YouTube it also works and moves to each speaker... I'm so confused now š
YouTube doesn't support 5.1 - so whatever you were hearing was a 2.0 signal.