The Components
There are several components to build a home theater. You must know what the components needed to build home theater, home karaoke or home entertainment. Display unit, player unit and processing unit are several of them.
The center of any home entertainment center is the display. If you already have a good sized TV you may want to hang on to it for now, but older televisions, even really big screen ones, cannot compare to the brightness and clarity of today high definition models. Alternately you may want to consider a projector as a replacement for your TV. Projectors can throw an 80 to 100 inch high definition image right on to your wall, and that is truly home theater!
To process audio video signal to sound atmosphere you want, you need an AV receiver. An AV receiver is essential to a home theater. You will want one that has high definition outputs and has an input for every device in your home theater. This means that if you will have a DVD player, a Video Game system, a cable box, and a CD player you will need at least 3 video and audio inputs and 1 audio only.
You will also need speakers to go with your stereo. These include front left and right, a center channel, rear/surround left and rights, and preferably a subwoofer. There are guides here that can help you pick out just the right speakers for your system.
You may want to consider a Media Center computer for your entertainment system. Media center computers greatly expand the capabilities of your home entertainment center. They allow you to have your whole music collection at your fingertips, watch movies off the internet on your big screen, play DVDs, play computer games on your home theater, listen to internet radio through your stereo, and surf the internet from the comfort of your couch. If you choose to get a media center computer you WILL need a high definition TV or projector.
Now of course comes all the basic components. DVD PLAYER, VCD player, cable box, CD player, game console, cassette deck etc. You probably have many of these already, and if you are getting a media center computer then it will replace many of them.
Lastly you will probably want a piece of furniture to house everything. What you go with here is mostly about your personal taste and what will go well in the room. If you got a projector, then all you really need is a small shelf for all the components to sit on and maybe a wall or ceiling mount for the projector.