This article is from the Ambisonic Surround Sound FAQ, by Martin Leese with numerous contributions by others.
Ambisonic Surround Sound is a set of techniques, developed in the
1970s, for the recording, studio processing and reproduction of the
complete sound field experienced during the original
performance. Ambisonic technology does this by decomposing the
directionality of the sound field into spherical harmonic components,
termed W, X, Y and Z. The Ambisonic approach is to use all speakers to
cooperatively recreate these directional components. That is to say,
speakers to the rear of the listener help localise sounds in front of
the listener, and vice versa.
Ambisonic technology is based on a meta-theory (a theory of theories)
of sound localisation developed by the late Michael A Gerzon when he
was with the Mathematical Institute, University of Oxford (see the
Gerzon 1992a reference). Ambisonic decoder design aims to satisfy
simultaneously and consistently as many as possible of the mechanisms
used by the ear/brain to localise sounds. The Gerzon theory takes
account of non-central as well as central listening positions.
In an Ambisonic decoder the spherical harmonic direction signals, W,
X, Y and Z, are passed through a set of shelf filters which have
different gains at low and high frequencies designed to match
different ways the ear/brain localises sounds. (The different
localisation mechanisms operate below and above about 700 Hz.) The
speaker feeds are then derived by passing the outputs from the shelf
filters through a simple amplitude matrix. An important aspect of
Ambisonic decoder technology is that it is only at this final stage of
processing that the number and layout of speakers is considered.
The listening area for Ambisonic Surround Sound is comparable with
that for conventional stereo, but larger.
 
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