Why a separate DAC?

If you music is only important enough to listen to it through an AVR, then you don't need a better DAC.

I also contend that you don't need a better DAC for movies either.

So it seems as though you are set.

Shakey

Separate DAC is one practical way to tweak the sound if needed or desired. ITs that simple. If built in DAC already in use sounds good enough, then no need.

If you like the amazing sound of Arcam AVR. Keep it and enjoy. Separate DAC only enables you to change the sound to music the way it was intended to be heard:

I purchased separate DAC-pre that has multiple digital inputs as one of the reason. It's all I actually need ONE input for analogue and rest of inputs are digital.
Another reason you can find cheap player with good transport and digital out, mate it with good dac and save lots $.

The extent that you would benefit from an external DAC would depend on use of system for music vs. video and what sources you listen to, CD vs. DVD/BD vs. computer.

Thanks folks - this confirmed what I thought. When I was researching I wanted to build a system with a tilt towards HT, but could be somewhat HiFi too. Arcam had the lowest THD I could find, and the wattage, sensitivty(?), etc seemed pretty good. That said I feel like Bluray (DTS-MA/Dolby TrueHD) content sound amazing, but I feel like the music is not as good as it could be. Perhaps I'll give one of these a go. Stick with Arcam, despite the mild scoff above, or try something else? Mainly using for iTunes content (the humanity!).

Oh and btw, can't overstate how amazing movies sound without separate components.

I am not familiar with your AVR however it is likely it can be used as either multichannel HT and 2 or 2.1 channel audio for music. Many BD players are not at their best when used for CD playback. Your player could be used as a transport into a stand alone DAC for listening to music. Use the spdif digital output from the player. Use the same player as currently connected for video.

It's the AVR360, lowest wattage in the bunch from Arcam, at 75watts per channel (small apt). All of the circuitry and processors are Identical across their entire AVR range, only difference I can tell is wattage. As for speaker configuration, I have two KEF R300's bi-amped, with their slim center. No rear or sub. Cables are Signal.

Running music through it, I just Airplay over Appletv, which I think is my weakest link, which is why I've been investigating a DAC with Airplay. I will try burning a CD and playing through the BR as an experiment. Kind of curious if that will affect anything. HDMI can transport more data than SPDIF as far as I know, so I shouldn't lose signal there. I'll reply back if it makes a difference.

As for the DAC part - I'm keen to have something easy to use with Airplay or Bluetooth, but prefer Airplay.

Thanks for replying back!

Your weakest link is your source material. I speak from personal experience. I most frequently listen to spotify through my Sonos, which is similar in sound quality to airplaying itunes music. I hooked my Sonos to an Audio Research DAC8 (pretty high end DAC)margin difference if any at all. The bottom line is my music source (like yours) is not going to sound any better with a new DAC. If you are looking for a sound improvement it should start with your source material.

Bob - just saw your other post about room correction, etc. my AVR actually isn't using room correction because it's not supported in bi-amp mode. That said the input is via HDMI, so it is surely digitized going in.

Interesting question though if the DAC is actually being engaged though since room correction is not happening... I'll check with the manufacturer. Appreciate all the feedback :). Hopefully I can contribute something back!

Thanks Skyflyer - I know of the Sonos stuff, and think we have a similar situation on the content issue.