The Hindu Business Line  Apr 8  Comment 
To enhance the entertainment experience, Dolby Laboratories plans to install its latest technology — Dolby Atmos — in 75 screens across the country by the year-end. At present this new te...
DailyFinance  Mar 24  Comment 
CinemaCon 2014—Dolby Laboratories, Inc. (NYSE: DLB) and Lippo Group announced today that Cinemaxx, a new exhibitor under Indonesia’s Lippo Group, has committed to installing Dolby Atmos in 100 cinema screens over the next...
CNNMoney.com  Mar 17  Comment 
Read full story for latest details.
DailyFinance  Mar 14  Comment 
BT (NYSE:BT) and Dolby Laboratories, Inc. (NYSE:DLB) today announced the latest updates to BT® MeetMe with Dolby® Voice™ , an audio conferencing service that makes conference calls sound and feel like in-person meetings....
Wall Street Journal  Mar 13  Comment 
Dolby Laboratories built a brand by enhancing sound in recorded music, movies and television shows. Now it's targeting a fixture of the business world—the conference call.
Sydney Morning Herald  Mar 5  Comment 
Standing ovations get thrown around at the Oscars like confetti at a wedding, though it's usually geriatrics and barely-living legends on the receiving end. But when 31-year-old Lupita Nyong'o won the best supporting actress award on Sunday for...
SeekingAlpha  Jan 24  Comment 
Dolby Laboratories, Inc. (DLB) F1Q14 Earnings Conference Call January 23, 2014 5:00 pm ET Executives Kevin Yeaman - President and Chief Executive Officer Lewis Chew - Executive Vice President and Chief Financial Officer Elena Carr...
StreetInsider.com  Jan 23  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Dolby+Laboratories+Inc.+%28DLB%29+Tops+Q1+EPS+by+25c/9083082.html for the full story.
DailyFinance  Jan 9  Comment 
Dolby Laboratories, Inc. (NYSE:DLB) will release financial results for the first quarter (Q1) fiscal 2014 after the close of regular trading on Thursday, January 23, 2014. Members of Dolby management will lead a conference...


Dolby Laboratories produces technology for producing and playing audio for films and television shows. Its AC-3 is the exclusive audio format for the DVD, meaning all DVDs and DVD-compatible audio-video equipment must license AC-3 technology from Dolby. Since 2000, the company has surfed the DVD tidal wave, with its revenue growing by around 150%.[1] The advent of high-definition home entertainment, however, means that there is a new standard video format - Blu-Ray - which requires new audio standards. Fortunately for Dolby, its HD audio format is still used on Blu-Ray media; unfortunately for Dolby, so is the HD audio format of its main competitor, DTS, and both will be found on every Blu-Ray disc. This means that the company will no longer enjoy monopoly pricing on licensing to its most profitable customer (the home entertainment industry). To make matters worse, the overall DVD industry is in decline, with consumer spending falling thanks to digital piracy, video on demand, a slowing economy, and, of course, the introduction of high definition media.[2]

One trend that works to Dolby's benefit is the emergence of the digital cinema market, as the company offers products and services for producing and playing digital films. Just 5.5% of the world's movie theater screens have been converted to digital thus far,[3], and although declining movie attendance may slow the conversion to digital in the short term, Dolby is poised to benefit in the long term as its main competitor DTS divested its digital cinema segment.

Business Overview

Dolby Laboratories is an entertainment technology company, and is best known for its ubiquitous audio technologies, which are the standards for sound coding and playback in cinema, DVDs, and, more recently, Blu-Ray HD video. The company has its hands in a broad assortment of digital media which attractively diversifies the company’s offerings. In fact, it is nearly impossible to buy a consumer electronic device that does not feature at least one license held by Dolby. Of particular note, the company receives royalties for every version of Vista home premium or ultimate edition. Also, blue ray has been dubbed the standard of choice for high definition home film medium and Dolby receives royalties from each of these players as well. The company notes that notepads are just now beginning to be shipped with blue ray players and as this trend picks up, it will likely have a strong impact on 2009 revenues. The company received the vast majority of its revenue from the license segment instead of products and service. Since the license business carries higher margins, the profitability of the firm is very strong. CyberLink Corporation, a manufacturer of personal computer DVD software, is Dolby's biggest customer at 10% of revenues.[4]

Dolby is an international firm, with customers throughout the U.S., Europe, and Asia. As emerging economies in Asia and elsewhere continue to develop, their consumers will start purchasing entertainment media, creating new growth opportunities for Dolby abroad.

Business & Financial Metrics[5]

In 2009, Dolby generated a net income of $243.0 million on revenues of $719.5 million. This represents a 21.8% increase in net income and a 12.4% increase in total revenues from 2008, when the company earned $199.5 million on $640.2 million in revenues.

Trends and Forces

The Shift from DVD to Blu-Ray Means Dolby Will No Longer Have a Monopoly on Home Theater Audio

The new Blu-Ray standard, which has the ability to hold both "lossless", high-quality audio and high-definition video, means consumers are going to want home-entertainment systems that allow them to take advantage of these new features. Dolby's TrueHD audio format is one of three formats that Blu-Ray supports, the others being DTS's DTS-HD Master Audio and a standard digital coding called Linear Pulse-Code Modulation (Pulse Code Modulation was also required for DVDs). Now that DTS's audio coding technology is mandatory in all Blu-Ray films, the market for home theater equipment has expanded; consumers actually have a choice between Dolby-compatible DVD players and surround sound systems and DTS compatible DVD players and surround sound systems. Furthermore, hardware manufacturers can also choose between audio formats, so Dolby can no longer charge the same high licensing rates that it could when it had a veritable monopoly on the home audio market. Aggravating this effect is the slow but imminent demise of the conventional DVD market.

As Movie Theaters Transition to Digital Sound, Dolby Is Poised to Benefit

In 2010, most movies shown in theaters are analog, with projectors shooting images from rolls of film onto the screen. Slowly, however, digital cinema projectors and screens are proliferating. This technology uses digitized audio and video, rather than traditional film (think MPEGs instead of video tapes).[6] Dolby sells products and services for mastering, packaging, loading, storing, decoding, and delivering digital films, making it one of the greatest potential beneficiaries of a transition to digital cinema. The speed with which this transition will occur is unpredictable, however, as factors like digital piracy have cut into movie attendance, making movie theaters less profitable.[7] With ticket sales down, theater owners are less likely to upgrade their screens to digital, slowing the overall progress of the transition. If the movie market improves, then the adoption of digital cinema will speed up, and Dolby will profit as the new theaters implement its technology.

Dolby Rises with the Tide of the Home Entertainment Sector

Dolby technologies are used in films that are shown both in theaters and in people's homes. As the home entertainment sector grows, so does Dolby's revenues. Dolby's position as a licenser of the standard audio format for DVDs, and (among others) for Blu-Ray, allows it to take licensing revenue from both the film and video game industries, which will help it capitalize if the home entertainment sector continues its growth.


Dolby's main competitor is DTS. In the past, Dolby was the standard audio formatting for DVDs, while DTS was relegated to another supported position, but the growing popularity of Blu-Ray, which must support both Dolby and DTS audio formats, means that Dolby no longer has a monopoly over the market for home theater audio.[8]

Competitors for Dolby's other licenses include DivX, Sony, Philips, RealNetworks, Microsoft. Many of these companies are much larger than Dolby, and have greater financial strength, allowing them to spend more on developing new technologies, marketing them, and enforcing their licenses and patents. Furthermore, as media becomes increasingly linked to the internet, Microsoft and RealNetworks have the advantage of being experienced in web media. These two companies, aside from being familiar with the existing technology for web entertainment, also develop well-known internet media systems (RealPlayer and Windows Media Player, respectively); if either of these companies develops new entertainment technology, they can package it with a new release of the media player, thereby integrating the technology into an already existing medium - an advantage that Dolby does not have, as it would have to find a media system vendor to license its technology to.

Some of Dolby's competitors are also its customers; Sony owns the Blu-Ray format, for example, and Universal uses many of the company's cinema products and services, despite being a shareholder of DTS.


  1. DLB 2007 10-K, Page 39
  2. Video Business: "The format war cost home entertainment in 2007"
  3. Research and Markets: "Digital Cinema: Global and European Roll-out, Business Models and Forecasts to 2012"
  4. DLB 2007 10-K, Page 5
  5. DLB 2009 10-K pg. 40  
  6. Research and Markets: "Digital Cinema: Global and European Roll-out, Business Models and Forecasts to 2012"
  7. http://www.boxofficemojo.com/yearly/
  8. DTSI 2007 10-K, Page 18
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