Reproducing video usually involves a large-screen or high definition television. Some people will also go so far as to use an actual projection system with movie a screen to project the image on.
A projection system will often allow you to get the largest and cheapest image, while still allowing you to have a high level of image quality. New plasma screen televisions however, allow you to get an image that surpasses anything you will ever see in a real world cinema.
Quality audio reproduction is usually achieved with a surround sound system. This involves a varying amount of speakers, all arranged in different positions to get entire coverage of a room.
Aside from covering all directions, a subwoofer system is necessary to get that highly important "oomph". Usually, you would not always turn this system on for all of your viewing. It's just not needed for all material.
While you obviously want full coverage when you're watching a DVD of the newest action blockbuster, surround sound isn't necessary and often annoying when it comes to watching the news. Most people will use their regular television speakers for this purpose, instead of their full home theater.
Technically, a home cinema could be as basic as a simple arrangement of a television, DVD player, and a set of speakers. Most people however, consider a home cinema to be a highly configured system using exclusive components to get the sort of experience you don't normally find at home.
High-quality home theater systems are always assembled from component pieces purchased separately to provide the best combination of equipment for the cost. One usually does massive amounts of research to find the "best bang for your buck".
These days it is now possible to purchase home theater in a box kits that include a set of speakers for surround sound, an amplifier or tuner for volume and video source control, as well as a high definition DVD player.
While these kits can't match the quality of a totally custom built home theater, they are both inexpensive and easy to set up. Just add TV and you're done.
Naturally you should start with something simple and small -- then expand on it.
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