DTS-HD and PCM from someone who has no idea…

Sonos Arc does not support DTS-X, or DT`S-HQ uncompressed audio, but does support lossy DTS 5.1, however a workaround (as you have discovered) is to have the player transcode the DTS-HQ audio into LPCM multichannel audio and that’s what your Panasonic player is doing and the audio is presumably passing uninterrupted through the TV (check you have set the TV HDMI-eARC port to pass-through) and the Arc is then playing precisely what was sent to it. 

Like you, I do notice with my BluRay player (just a PlayStation in my case) seems to produce quieter audio output in this transcoding situation and I have to turn up the volume.

I personally (much) prefer the sound of Dolby TrueHD or even compressed (lossy) DD+ Atmos audio from the streaming services, but I guess where there is only the option to transcode the audio from DTS-HQ to LPCM it’s better than having 2 channel stereo, or no audio at all.

Some here do request that Sonos provide support for DTS-X and DTS-HQ codecs on their HT products and that should then help, hopefully.

I guess that hasn’t helped here, but maybe see if adjusting the Panasonic settings may provide you with better output. I find I’m in the same boat, but appreciate the Arc is just playing the audio it is sent.

Multichannel PCM 7.1 is the best option you can get with your setup, because what this means, as Ken suggested above, is that your player losslessly converts DTS-HD into Multichannel PCM, which is then passed through TV into ARC. I, too, have experience that DTS-HD default sound level is somewhat lower than other formats and I have to turn up the volume to compensate. Other than that, it sounds great. I have Shield TV Pro as video signal source plugged to LG C2 and from there to ARC with 2 ONEs as surrounds, so fairly similar setup.

Would it be possible that your particular title (Scream 2) simply has poor audio master in general? Did you try other movies?

I have similar setup: LG CX , Sonos Arc 5.1.2 and Panasonic 4K blu-ray player (UB820) I have never after many attempts and settings and on-line recommendations been able to configure the UB820 to pass Multichannel PCM 7.1 for any of my DTS 4K UHD blu-ray disks through the LG CX TV to Sonos ARC, only PCM 2.0 for any DTS codec. There is some incompatibility between the UB820 and LG CX TV. 

Instead I purchased a Sony 4K blu-ray player that does pass Multichannel PCM 7.1 through the LG CX TV with a simple setting in the Sony menu and it sounds very good, fills the room with surround sound on the Sonos ARC 5.1.2 through the LG CX TV. I use the Sony player for all my DTS disks and the Panasonic player for Dolby Atoms disks.

What you described “Very soft and not at all powerful” sounds like PCM 2.0 not Multichannel PCM 7.1 Are you sure you’re passing Multichannel PCM 7.1 ? Which Panasonic 4K blu-ray player do you have? 

Thanks for the reply guys. I did read that Sonos was working on allowing to downmix to 5.1pcm but I’m taking that with a grain of salt. The sound isn’t too bad, once you turn it up to around 80. I find dialogue a little hard to hear tho, whereas on my other Dolby Digital 5.1 or Atmos tracks a level of around 20-30 is sufficient. 
 

Maybe this will help with dialogue…

https://support.sonos.com/s/article/4796