Cloud III DTS not available on Xbox
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The DTS license provided with the Cloud III is not able to be used on Xbox, only PC.
The license is accessed on PC by plugging in the Cloud III via the included USB adapter. As the USB adapter does not function on Xbox due to system limitations, the license is also not able to be used on Xbox to access DTS functionality.
Windows Sonic (free) is a free alternative you may use on Xbox.