(MONEY Magazine) – Does this sound familiar? You saw a movie in a theater and loved it, so now that it's out on video, you've invited friends over to see it in your living room. Everyone gets comfortable, you dim the lights and pop in the cassette. And not much happens. The sound track doesn't swell. The cinematography isn't as lush as you remembered. Even some of the actors' nuances that delighted you are lost on the small screen. Your friends think the movie is okay but don't see what you were gushing about. And as you vacuum up the fallen popcorn afterward, you wonder: Why can't you get more of the theater experience in your home?

Actually, you can. Home theater systems, once the province of Hollywood moguls, are becoming as affordable as an ordinary used car, even as new technology enhances the quality of picture and sound. Sales of large, rear-projection TVs increased 6% to 925,000 units in 1997, while buyers also scooped up 960,000 sets of surround-sound speakers. In fact, you probably already own some of the components of an entry-level home theater system:

--A 25-inch or larger TV

--A high-fidelity VCR

--Three high-quality speakers and two lesser ones (to surround you with the movie's sound effects)

--A surround-sound receiver with at least four channels of audio (to separate the different bits of sound and pump each one to the appropriate speaker)

If you've got the TV and VCR, you can buy the rest of the basics--five mini-speakers, a subwoofer (to beef up those big, low-frequency bass tones in the sound track) and an audio/video receiver--for as little as $499, in the Ensemble IV system, available from Cambridge SoundWorks (800-367-4434). But to get more of the movie-theater experience, you'll want to upgrade, either now or later, to more capable and expensive gear, including one of the new machines that plays movies on "digital versatile disks," which have far richer sound and picture resolution than VHS cassettes. A high-quality home theater system, built from scratch around a DVD player and a 46-inch rear-projection TV, with a good receiver and speakers, will cost about $5,000.

To help you build the best system for your budget, MONEY interviewed a dozen home theater experts. They advised that you consider four main factors that will help turn your den into a movie palace: the size and resolution of your TV screen, the quality of your five or six speakers, the adaptability of the A/V receiver that drives those speakers, and the richness of the audio/video "signal" that you use (for example, from your VCR or DVD player). Here's what you need to know about the basic components:

TELEVISIONS

All TVs can display digital programming, which produces a higher 525 lines of resolution than today's standard VHS tape (280 lines). If you already own a set whose screen measures 25 inches or more diagonally, you don't need to replace it. But if your set is smaller, or if you want to upgrade, you can choose among the following options:

--Direct-view TVs. These are the cathode-ray-tube models found in most homes, and they range in price from about $300 for a good 25-inch set from Sony or Toshiba to more than $2,000 for the highly regarded Mitsubishi 40-incher. Such TVs are still the best bet for a small room--one measuring less than 10 feet in length. --Rear-projection TVs. If you have enough space to sit 12 feet or more from the screen and are willing to pay $2,000 or more, these large-screen monitors offer a rich, movie-screen-like experience. As their name implies, these TVs project images onto the screen from the rear through the use of various lenses and mirrors. Rear-projection TVs range in size from the highly rated 40-inch models by Toshiba ($3,100), to Pioneer's 46-incher ($2,199) on up to Mitsubishi's mammoth 80-inch, $10,000 VS-8087. Robert Harley, technical editor of Fi magazine and author of Home Theater for Everyone (Acapella Publishing, $19.95; 800-848-5099), cautions that while size matters, it isn't everything. "A high-quality 46-inch screen with a rich picture will be much more satisfying than a lower-quality 60-inch model." So be sure to compare pictures before buying. Ask your salesperson to turn up the store lights, so you can see whether the picture washes out. Also, look for two features that improve picture clarity: a digital comb filter and a color temperature control.

--Front-projection TVs. These monitors, which you may have seen in sports bars, have a projector mounted at the front. Their main advantage is that you can project the image onto a screen or whitewashed wall in sizes ranging from 30 inches to 20 feet. The drawback is their cost, which starts around $6,500 for a decent entry-level unit such as the Sony VPL-W400Q and ends somewhere north of $50,000. If you're interested, go directly to a high-end electronics specialty store.

--High-definition TVs. Starting this fall, and at a cost of at least $5,000, rear-projection wide-screen TVs should be available in HDTV models, with 1,150 lines of resolution. HDTV programming, via broadcast stations, will look great on these sets. But it will phase in gradually over the next 10 years. So you shouldn't worry that your current big-screen TV, or the one you're thinking of buying before this fall, will be obsolete. Also, converter boxes will allow your "old" TV to receive HDTV programming.

RECEIVERS

If you've bought a decent audio receiver in the past several years, chances are it can serve as the brain of your home theater system, controlling both the speakers and the various "inputs" through which you play movies: your VCR, DVD player and the like. Check to see whether your receiver, or one you're considering, is equipped for "Dolby Pro-Logic." If so, it can separate at least four channels of sound and send different signals to your left, center and right speakers, with the fourth channel going to both of your rear surround speakers. Better yet is "Dolby Digital," also known as AC-3, which can send separate channels of sound to all five speakers, as well as to a subwoofer (to deliver more realistic sound effects of tornados or dinosaur footsteps). After all, as Star Wars director George Lucas observes, realistic sound is at least half of the moviegoing experience.

The receiver also lets you connect your TV to multiple sources of audio and video information: CD player, VCR, DVD player, laserdisk player and direct broadcast satellite dish. How many of these sources do you plan to use? That should influence how much you spend on a receiver. Good-quality, inexpensive models like the NAD AV-711 ($499) and the Harman Kardon AVR20 ($380) accommodate inputs from your VCR, CD and DVD players and DBS dish. But if you also play movies on laserdisk, you'll want the extra inputs available on units that decode Dolby Digital surround-sound like the Yamaha 1080VR ($700) to the Denon AVR-3200 ($1,200). These units can also be worth the extra freight if you want to hear the helicopter gunships maneuvering behind you, just before they burst onto your TV screen.

SPEAKERS

Rob Sabin, senior editor of Home Theater magazine, recommends you buy a set of five from makers such as Energy Take 5 (ES-8, $500) or Definitive Technology (ProCinema Series, $1,350). These will serve nicely in most home theaters. If you or your mate or kids love action films with special sound effects, consider adding a powered subwoofer for another $300 to $700, which works best with a Dolby Digital surround system. Audiophile Harley suggests that you:

--Buy your speakers from a company that specializes in them, such as NHT, rather than one that makes everything from TVs to toasters.

--Be sure the front three speakers are compatible, for realistic sound. This is easy if you buy them all at once. But if you're shopping for a center speaker to go with a front pair that you already own, remember to bring along the make and model number of your old speakers. And make sure the center speaker is electromagnetically shielded from the TV signal: You'll want to place this speaker directly above or below the screen so you'll hear the dialogue directly from the characters.

--Knock your knuckles on the speaker cabinets. If the resulting sound is hollow and resonates, the cabinets are poorly made. If the sound is a dull thud, the cabinets are solid and have the proper bracing.

THE SIGNAL

Digital versatile disks and the machines that play them are at the vanguard of the home theater revolution. Introduced in April 1997, DVD players look like your audio CD player and play disks that are the width of CDs but are about twice as thick and capable of storing 135 minutes of movie on a single side. The DVD's sound is superior to that heard on a videocassette or a cable-TV movie. But what's even more exceptional is its picture. A DVD-driven picture has 525 lines of resolution--as opposed to a VHS cassette's 280--and approximates the vivid color and crisp definition of a movie at the local sixplex. Among nationally available DVD players, all of our experts recommend the Sony DVP-S7000 ($1,000) or, in a lower range, Toshiba's $500 to $600 models.

Currently, the only other way to get digital pictures is via a direct broadcast satellite system, which provides (through an easily installed dish such as the 18-inch-wide Sony SAS-AD3, $600) clearer, brighter pictures and sound than cable or VCR. DBS users sign up with a program provider, such as USSB/DirecTV or Prime-Star, whose basic fees start at about $30 a month, with additional charges for pay-per-view movies and events like concerts and boxing matches.

Is your VCR or laserdisk player obsolete? Hardly. If you want to record your favorite TV show, the VCR is still the only option. And if you love the movies of yesteryear, keep that laserdisk player: More than 60,000 titles are available on laserdisk, as opposed to 600 on DVD. Soon, though, many more DVDs will be available for sale or rent at rates comparable to those for videocassettes. Already, movies on DVD disks cost between $20 and $30, or less than half the price of a laserdisk.

If you know exactly what you're looking for, you can often get the best price on the most popular home video components at a discount chain such as Circuit City. But for more sophisticated systems, your best bet is an independent electronics specialty store. (Call the Professional Audio Video Retailers Association at 888-367-7272 for a specialty store near you.) A relationship with a specialty dealer will pay dividends if your equipment develops problems or if you decide to trade up.

If you're not comfortable installing your home theater system, you can find a professional through the local specialty store, which will charge about $200. If you do it yourself, be sure to place your couch or chairs at a distance from the screen of about five to eight times the screen's image height. For example, a TV is called a 46-incher after the diagonal measurement of its screen; that screen's height is 27 inches. You therefore should sit 11 to 18 feet from it.

A home theater system is best controlled by a single remote that operates all the components through the brain--the receiver. Ask for a demonstration of the remote before your purchase. "You know you will have a problem with the remote if the salesperson is having a hard time, and he's trained to operate it," says Jonathan Svezia of Innovative Audio Video in New York City. Also, look for a remote with buttons that have different sizes and shapes for different functions and that illuminate for easy use in your darkened theater.

Now the room is ready for action. When your friends see your favorite movies here, they'll know what all the fuss was about. You may even decide to charge admission just to keep down the crowds.