A playback apparatus that, when it is incorporated in a home theater system, judges via the HDMI whether an apparatus such as a speaker 600 connected thereto has a playback capability. If the connection partner apparatus has the playback capability, the playback apparatus inquires a user whether a decoding should be performed using a decoder embedded in the connection partner apparatus. If, in response to the inquiry, the user indicates that the decoding should be performed using the decoder of the connection partner apparatus, the playback apparatus reads a digital stream from a recording medium and outputs the read digital stream to the connection partner apparatus, by the pass-through output, regardless of a decoding capability of the playback apparatus itself.