Dolby is upbeat about the new high-quality audio feature that Netflix announced May 1 for its streaming video customers and the ongoing transition to the new Advanced Television Systems Committee (ATSC) 3.0 broadcast standard, according to Kevin Yeaman, the company’s CEO and president.
At the same time, Dolby continued to be pleased with the continued “momentum” of its Dolby Atmos immersive sound technology, Dolby Vision High Dynamic Range (HDR) format and Dolby Cinema premium theatrical offering, he said May 1 on an earnings call for the second quarter of fiscal 2019 (ended March 29).
The new high-quality Netflix audio feature that was announced by that company on its blog is being “delivered via our technologies,” Yeaman said during the call’s Q&A. Noting that the new feature will “allocate more bandwidth to the audio experience,” he said Netflix streaming users will, therefore, get a “Dolby experience with more bandwidth — so, of course, we’re all in favor of it.”
Adding that Netflix partners “very closely with Netflix and our other partners around services like that,” he called the new feature a “way of providing even better quality to their customers, and anytime that people recognize the value of high quality audio and video, that’s people playing in our tune – we love it.”
In announcing the new feature, Netflix noted that it already supported technologies including Dolby Atmos, HDR, 4K Ultra High-Def (UHD), and said it’s now taking its sound quality “to another level” by providing “audio that sounds closers to what creators hear in the studio, so every little detail is captured for a richer, more intense experience.” Also, for customers with “bandwidth or device limitations, we’ve made the feature adaptive so that we will deliver the best possible audio to match your capabilities,” it said, noting that’s “similar to what we already do for video.”
Asked on the May 1 earnings call what the transition to ATSC 3.0 means for Dolby, Yeaman noted that the standard’s U.S. rollout is supporting Dolby’s new AC-4 advanced audio format. “That’s great for us because it gets to the next generation of our experience and allows for greater efficiency, it’s natively designed to work well with Dolby Atmos, and it also has a lot of feature enhancements, which we think … can add value to our partners and consumers as we go forward,” he said, adding: “We’re seeing great traction as well in Europe. We have a number of countries that have begun to transmit using AC-4. And so, overall, I feel great about where we are in that technology cycle and with the adoption that we’re getting around the world.”
Dolby also felt good about the “value proposition” of AC-4, he said, explaining: “What we’re selling is a more efficient way to deliver higher quality experiences, like Dolby Atmos, and that’s what AC-4 is all about. So, all of that combined to give us confidence across the markets we operate” in.
Dolby, meanwhile, reported stronger revenue and earnings than it did in Q2 last year, driven in part by the continued strength of Dolby Atmos, Dolby Vision and Dolby Cinema, he said.
Total Dolby Q2 revenue grew to $338.3 million from $299.7 million a year ago, while profit increased to $73.4 million (70 cents a share) from $65.2 million (61 cents a share). Licensing revenue grew to $310.3 million from $272.1 million, while products and services revenue increased to $28 million from $27.6 million.
Yeaman pointed to the various announcements of manufacturer support for Atmos and Vision since the beginning of this year, starting with CES in Las Vegas, where Panasonic joined the list of TV makers supporting the combined Atmos and Vision experience and Dell announced its first PC supporting Vision.
“After announcing its first TV with Dolby Vision and Dolby Atmos, Panasonic strengthened that support by announcing five additional models with the combined experience,” he said on the call. TP Vision also recently announced that 90% of its Philips UHD TVs for Europe will include the combined Vision and Atmos experience, he said.
At Mobile World Congress in Barcelona in February, “we saw even more examples of Dolby experiences being included within the latest PC launches,” he noted, pointing to new Lenovo and Huawei devices, as well as Sony showing its first smartphone including Atmos, the Xperia 1. Oppo also recently announced it will include Atmos on its mobile phones, he noted.
“We continue to see adoption across a broad range of devices,” he said, pointing to the Amazon 4K Fire TV supporting the combined Vision and Atmos experience and Microsoft’s Xbox One being the first video game console to include the combined experience. “Later this year, we expect the first Dolby Vision and Dolby Atmos experiences to be enabled on pay-TV set-top boxes,” he added.
At the NAB Show in Las Vegas in April, many Dolby partners demonstrated their latest content creation and distribution tools and “cooperating support” for AC-4, Atmos and Vision, he said. During NAB, Dolby also “demonstrated our cloud-based media processing solution, which provides customers with a scalable workflow for high quality encoding of all of their content, including content in Dolby formats,” he pointed out, adding: “This solution is already in use at Sony and Deluxe among other major providers. These tools and services will help to scale the amount of Dolby-enabled content around the world.”
Dolby partners including Amazon, Apple and Netflix “have all been streaming content in both Dolby Vision and Dolby Atmos, and we are continuing to see steady growth in the amount of content available,” he told analysts. Apple iTunes now has more than 450 titles available in Dolby Vision and over 300 titles available in Atmos, while Netflix has more than 500 hours of content in Dolby Vision and over 200 hours in Atmos, he noted.
At CinemaCon in Las Vegas, just before NAB, Dolby “highlighted our progress in expanding the global footprint” of Dolby Cinema, he said. As an example, he said, Dolby opened its first Dolby Cinema site in Kuwait during Q2 and “we expanded our presence with additional sites” in Japan, France and the U.K. “These recent openings add to the broad deployments we have achieved within the U.S. and China markets,” he said, adding: “In total, Dolby Cinema is currently available in 10 countries, and we have more than 20 exhibitor partners with about 215 screens open and another 200 committed.”
At the same time, Dolby Vision and Atmos “continue to enhance the storytelling and moviegoing experience of many of the top box office films,” he said, noting the Disney/Marvel films “Captain Marvel” and “Avengers Endgame” are among the latest titles released theatrically in the combined experience. “There are now over 230 theatrical titles, which have been released or announced” in Dolby Vision and Atmos, he said.