Audio pass-through vs local decoding
Shield can pass-through of all the mainstream codecs, but is not licensed to locally decode nor transcode of them. If the Shield detects that the device it is plugged into has the ability to handle the codec being used, the unaltered audio feed will be passed forward to be decoded out there. If it does not, Shield will simply fall back to basic decoding, and output a PCM 16bit stereo signal. In order to check the decoding formats ready to be passed forward by the Shield, go to Settings/About/Status/HDMI/Audio mode.
From <https://www.nvidia.com/en-us/geforce/forums/discover/297989/-
guide-audio-pass-through-hdmi-arc-physical-setup-settings/>