Yep, though technically it's UNCOMPRESSED PCM. The audio has to be MIXED according to the action on/off the screen, which means the mixing has to be done with lossless sound elements. Once that is done (very quickly and on the fly), the game's audio signal is sent out. If PS3 is set to HDMI Multichannel-PCM, it'll be uncompressed PCM. If the PS3 is set to optical, the audio signal has to be encoded as Dolby Digital or DTS signal before being sent out.
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