Suggestions for audiophile grade receiver for Home theater setup

Hi folks,

I am in the process of setting up my media room. I am very happy with its music performance. The home theater (HT) experience is lacking the surround effects (basically HDMI from TV converted to PCM stereo on Optical out). 

Objective is to make HT experience as engaging as 2.1 channel music with amazing sound quality. 

Background

Meida room - 85" TV, 9 ft viewing distance, 14 x 20 ft room. Audio gear includes pair of Focal Sopra 2, HSU MK15 sub, NAD M32 stereo amp. Basically a 2.1 setup. See pic

Content: Mainly streaming from Youtube, Netflix. Genres include Podcasts, Sports, News, Travel/Nature videos, Some music during weekends from Youtube and Spotify, few movies a month. I know these sources don't have the highest resolutions. But they have great access and convenience.

Options I tried

Recently I tested with a Denon AVR 2800H - wired it to the Focals and sub, along with Kef Meta Q1 for surrounds. A 4.1 setup. While this provided the surround effects. It led to a huge loss of sound quality in the fronts and sub. The sound lacked detail, power, it felt very thin. 

Then I also tried a 2.1 setup - Denon, Focals, sub - this was a huge dip in sound quality, in comparison to NAD amp 

What are the options going forward to make cinema sound as high quality and engaging as the current Focal/NAD setup for music?