The lag is usually experienced in TVs which have a 120Hz or 240Hz panel and have a motion smoothing feature such as Digital Natural Motion or 120Hz enabled. You must turn this feature off while playing games as depending on the complexity of the input signal, the TV might take some time to interpolate the 60Hz input signal to 120Hz which causes the lag.
To Remove Lag:
For TVs with Digital Natural Motion: DNM = Off
For TVs with 120Hz: 120Hz = Off
Note: Some TVs also have "Mode Selection = PC or HDTV", if you select PC, the TV will disable all video image processing features (such as dynamic contrast, noise reduction, etc.) and act as a pure monitor.
Further Reading and Helpful Information:
What causes lag for games & PCs while using DNM or 120Hz?
All 120Hz TVs always work at 120Hz, there are different methods of achieving 120Hz.
1. Frame Repeat (DNM or 120Hz = Off):
e.g. Input signal is 30fps ... The TV will repeat (120/30) i.e. 4 frames ... there is no lag in this case as the TV does not need to interpolate.
[Frame 1 ... Repeat Frame 1 ... Repeat Frame 1 ... Repeat Frame 1 ... Frame 2 ... ]
2. Frame Interpolation (DNM or 120Hz = On):
e.g. Input Signal is 30fps ... The TV uses consecutive frames to construct pseudo frames in between those frames using interpolation. Depending on the level of DNM, lag is more.
DNM Off -> [Frame 1 ... Repeat Frame 1 ... Repeat Frame 1 ... Repeat Frame 1 ... Frame 2 ... ]
DNM Min -> [Frame 1 ... Repeat Frame 1 ... (Interpolated 1 & 2) ... (Repeat Interpolated 1 & 2) ... Frame 2 ... ]
DNM Max -> [Frame 1 ... (Interpolated 1 & Mid) ... (Interpolated Mid) ... Interpolated Mid & 2) ... Frame 2 ... ]
You need to understand that for processing motion smoothing, the TV must have frames it receives after the current frame to create the interpolated frames, so it is theoretically impossible to remove lag when you have a third variable beyond the TV's control (your PC mouse or game controller).
For Audio-Video, the TVs processor syncs audio-video according to the level of DNM, hence you never notice the lag.
No pure computer monitor uses interpolation for this very reason. As a thumb rule, never use interpolation (DNM or 120Hz) for game consoles or PCs, that is exactly why you have the option to turn it off. As an exeption, if you are using your PC as a HTPC to watch movies and you like motion smoothing to remove judder, you can turn on 120Hz or DNM while you are watching movies, etc. and the turn it back off when you use input devices such as a mouse or keyboard.
The main reason a TV performs interpolation is to remove judder for slow frame rates such as 24fps & 30fps in television / movie content.
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