Digital Optical audio cable VS RCA Cables
As more people purchase high-end home entertainment systems to watch movies and play video games on, they are exposed to a myriad of options for cords, connections and jacks. This can get pretty confusing. At some point, users will choose between component video signals connected by RCA connectors and the newer High Definition Multimedia Interface (HDMI) cables. Before making a decision, it is important to understand the differences between them.
Digital vs. Analog
The basic difference between the signals carried by HDMI and those carried by component connections through RCA connectors is that HDMI is all digital, whereas component video is analog. HDMI carries its signals much in the same way a computer transmits a file to another computer, while component video is delivered through a series of varying voltages which is interpreted into a picture.
One point to consider in the debate between HDMI and RCA is the audio signal. Due to the digital nature of HDMI, it can carry both audio and video signals via a single plug, while the analog video component will require an additional cord to transmit audio. Normally, two RCA connectors in red and white are included in the cable. These are the audio connectors. The problem here is that you generally won't be able to receive surround sound audio from RCA, unless you replace the audio portion with an optic audio cable.
The biggest point of contention in this debate is always the video quality factor. Though many people will tell you to go with HDMI to improve quality, this isn't always the case. In fact, unless you are watching a movie from a Blu-ray or similar 1080p video source, there really won't be a noticeable difference. Component video cables are perfectly capable of carrying up to 1080i video signals, which is generally the best you will get from a cable or satellite source anyway.
Sometimes, the convenience factor can be just as important as quality to home-entertainment enthusiasts. Since HDMI only needs one cable (as opposed to up to five for RCA), an HDMI setup not only speeds up connection and dismantling, but also can help reduce clutter and signal interference between cables. However, HDMI is also significantly more expensive than RCA, which brings the issue down to how much you are willing to pay for convenience.