M+E Daily

The continued growth of Dolby Atmos audio technology and Dolby Vision high dynamic range (HDR) video in homes and theatrically via the Dolby Cinema platform played a major role in Dolby Laboratories reporting stronger results for its third quarter (ended June 30), according to company executives.

Dolby shares were up 2.88% at $54.40 in early afternoon trading July 26 after the company reported total Q3 revenue grew to $305.7 million from $277.6 million a year ago, while profit increased to $76 million (73 cents a share) from $63.6 million (62 cents a share). “Most of that [revenue] growth came in licensing, but we also had growth in our products and services revenue,” CFO Lewis Chew said on an earnings call July 25. Licensing revenue jumped to $278.1 million from $253 million, while products revenue grew to $22.6 million from $20.6 million and services revenue increased to $5 million from $3.9 million.

“Within licensing, we saw year-over-year growth in all of our key market categories except for PCs, which was down slightly,” Chew told analysts. Broadcast represented about 37% of total licensing in the quarter and grew about 3% from a year ago thanks to higher volume in set-top boxes, he said. Mobile devices accounted for about 20% of licensing revenue and grew about 18% from last year, while consumer electronics represented about 14% of total licensing and grew about 15% from last year, he said. PCs represented about 17% of total licensing in the quarter, but sales dipped about 1% from last year despite growing about 28% from the second quarter, he said.

CEO Kevin Yeaman pointed to several recent deals that expanded the presence of Dolby Vision and Dolby Atmos, as well as a deal with Les Cinemas Gaumont Pathe that expanded the Dolby Cinema “footprint” in Europe. Netflix, one of the initial Dolby Vision content partners, has been offering all HDR original content mastered in Dolby Vision and started streaming in Dolby Atmos for the first time during the third quarter, he said. The new Netflix original film “Okja,” meanwhile, is available in Dolby Atmos and Dolby Vision globally, he said, calling Netflix’s support of Dolby Atmos a “significant step in the expansion of the Dolby Atmos ecosystem” that “shows the strengthening of our partnership.” Netflix joined Vudu in delivering content in both Dolby Vision and Dolby Atmos, he noted.

Also in Q3, Disney announced it will release “Guardians of the Galaxy 2” – the studio’s first Ultra High-Def (UHD) Blu-ray offering — in Dolby Vision and Dolby Atmos for digital distribution, he pointed out. That announcement “built on their strong support for Dolby Vision and Dolby Atmos in the cinema,” he said, adding Disney joined other major Hollywood studios including Warner Brothers in creating Dolby Vision content for the home. Paramount became the most recent addition on that front July 20.

The first UHD Blu-ray discs with Dolby Vision were released in the third quarter, he also said, noting the initial releases came from Universal, Lionsgate and Sony, and “we expect to see titles from Warner Brothers and Paramount” in the future. The release of the first Dolby Vision UHD Blu-ray movies, meanwhile, coincided with the market availability of the first UHD Blu-ray players with Dolby Vision from Oppo, he said.

Dolby is also “seeing the beginning of Dolby Atmos in live sports,” he told analysts, pointing to the broadcasting of Premier League soccer matches in Dolby Atmos as one example. In France, meanwhile, the French Open was broadcast in Dolby Atmos, Dolby’s new AC-4 audio compression technology and Dolby Vision by France Television, he said.

On the video game front, the first Dolby Vision game – “Mass Effect: Andromeda” from Electronic Arts via an update — was made available in Q3, he noted.

On the device side, in addition to the first UHD Blu-ray players, Huawei shipped two MateBook PCs with Dolby Atmos in the quarter, while Sony’s first Dolby Atmos sound bar came to market, boosting the number of Atmos sound bars on the global market to 12, he said. In addition, Microsoft launched HDMI support for Dolby Atmos on Windows and the Xbox One video game console that enables playback on downstream Atmos devices including sound bars and audio/video receivers, he said.

Dolby also launched Dolby Atmos for headphones, which delivers Dolby Atmos over any set of headphones via an app purchase. Plantronics announced at the Electronic Entertainment Expo (E3) in June that new gaming headsets will include prepaid vouchers to download Dolby Atmos for headphones on Windows and the Xbox One. Plantronics is shipping three initial products supporting Atmos: the RIG 400LX at $99.99, RIG 600LX at $129.99 and wireless RIG 800LX at $149.99, it said, adding additional Atmos-enabled models will be announced later this year.

TCL started shipping Dolby Vision TVs in the third quarter also, joining TV makers including LG and Vizio in shipping Dolby Vision TVs at price points under $1,000, Yeaman also said.
“We made a lot of great progress on Dolby Atmos and Dolby Vision content and devices and I look forward to continuing with this momentum,” he told analysts.

The number of devices supporting AC-4, meanwhile, is growing, he said, pointing to the first shipments of TVs from LG and Samsung supporting that audio codec. Sony also announced it will be supporting AC-4 TVs, he said, predicting that, 
“over the long term,” AC-4 will be “broadly adopted across a wide range of devices.” But he said it will be a measured rollout, adding: “I don’t think this is going to be a major factor in the foreseeable future, but keep watching for things like early product adoption.” All signs are “pointing in the right direction” for AC-4, he said and predicted the industry will be “migrating” to the codec because of 
“higher efficiency,” the ability to better meet “the operational needs of the way the delivery environments are working today, and some new value propositions.”