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Manufacturer's Report - Dolby Surround Sound Update #5 - March, 1996

By Bill Barnes

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In this issue we'll be taking a look at the latest news on the DVD format and what it means for Dolby Digital AC-3 audio, and speculating a bit on the future.

What's in a Name?
Attentive readers will notice that recently we have begun referring to Dolby Surround AC-3 as Dolby Digital AC-3. Yes, there has been a slight change in the way that we refer to the technology. This was done to provide a better link between the consumer system and the Dolby Digital system used in movie theaters. In either case Dolby AC-3 is the audio coding technology that delivers 5.1 channels of sound. To further unite the various applications under the Dolby Digital banner, there will also be a change to the Dolby logo used on consumer products with Dolby Digital AC-3 decoding. The new logo will be the same as the "Dolby Digital" logo that was recently introduced for use on digital films. We plan to coordinate the logo change with the launch of DVD products, so the new logo will begin appearing on products this fall.

"I want my DVD!"
DVD, the Digital Video Disk or Digital Versatile Disk, depending on who you ask, has received a lot of press lately. As perhaps the most prominent new audio/video (A/V) format to use Dolby Digital AC-3 audio, it has generated unprecedented interest in this audio coding system. In the pages that follow we will be taking a closer look at recent DVD developments.

DVD and Dolby Digital AC-3 at WCES
The impact of DVD was evident at the Winter Consumer Electronics Show (WCES) held in Las Vegas, January 5-8. In the words of Consumer Electronics magazine, "WINTER CES 1996 -- 'DVD' SAYS IT ALL". To highlight the audio portion of DVD, Dolby Laboratories presented demonstrations of the AC-3 audio system (from laser disc sources) using consumer equipment already available in the marketplace, and displayed many of the Dolby Digital AC-3 and Pro Logic Surround decoders, laserdisc (LD) players, and cable TV boxes that are available. The display also included an early DVD player prototype, as well as copies of the laserdiscs available with Dolby Digital audio.

Several companies demonstrated DVD players at the show and took the opportunity to showcase a DVD player in combination with their own brand Dolby Digital decoder. In addition to the manufacturers who have already introduced or announced decoders (ADA, Adcom, Denon, EAD, Harman/Kardon, JBL, Kenwood, Lexicon, Madrigal, Marantz, Meridian, Perreaux, Pioneer, SoundStream, and Yamaha), Sony and Technics both announced their first surround decoders with Dolby Digital at the show.

Finally, a Standard
The details of the unified DVD standard were announced in mid-December of last year, ending months of speculation about which disc construction format and audio system would be used. In countries where NTSC video is the standard (North and South America, Asia) the specification calls for the use of stereo PCM audio and/or Dolby Digital AC-3 for multi-channel audio. In countries where PAL or SECAM video is the standard (Europe) the specification calls for the use of stereo PCM audio and/or MPEG audio. It is important to note that the PCM/AC-3/MPEG specifications are not mutually exclusive, that is, using one does not mean that the others cannot be used. The standard merely specifies the minimum audio requirement, and software producers are free to include additional optional audio formats if they wish. This means that Dolby Digital AC-3 may be included as an option on discs sold in Europe, and MPEG audio may be included as an option on discs sold outside of Europe. Discs can therefore include a particular audio system on world-wide basis. Exactly which optional audio systems are included on a disc will be the decision of the software producer. Keep in mind, however, that DVD involves a tradeoff between audio data and video (picture) data. We are not likely to see discs packed with several different audio formats, as this would take data capacity away from the video portion. Less video data, of course, means lower picture quality, and reducing picture quality for the sake of additional redundant audio formats (which carry the same soundtrack in two or more different forms) is a sacrifice that movie producers are not likely to make.

Software and Hardware Plans
DVD has certainly sparked a lot of discussion within the industry. Never before has a new A/V format generated so much interest within the consumer electronics, movie, and computer industries. Already, many manufacturers have announced their plans to introduce DVD players and software for home entertainment and computer applications later this year or early next year. As of February 1996, Panasonic, Philips, Pioneer, Samsung, Sony, Thomson, and Toshiba have all announced plans to introduce DVD players later in the year, with prices in the range of $500 to $800. In addition, Mitsubishi has announced plans for a DVD ROM player for computer applications priced at $200 for the fall of this year.

Several major software producers have also pledged their support of the DVD format, and industry experts expect 150-300 titles to be available by year end. In addition to major supporter Time-Warner, other companies, including Columbia-Tristar, MGM/UA, New Line, and MCA have estimated they will each have approximately 50 titles available, with Polygram estimating they will have 30-50 titles by year end. Several software companies have stated that they feel many consumers will prefer to own rather than rent DVD discs, similar to the way compact discs (CDs) and CD ROMs are purchased instead of rented. Based on the comments of software producers, it also appears that DVD discs will initially be priced in the $20-$30 range right from their date of release. This is in contrast to the current practice with VHS video tapes, which are usually priced quite high for the initial release (typically over $100) and then reduced in price for sell-through to consumers after some period of time. This practice helps to boost the rental market because very few consumers are willing to pay the $100+ initial price, and so video rental stores enjoy a good business for a while until the price of the video is reduced. If DVD discs are priced for sell-through right from the beginning, and if consumers view DVD as something to buy rather than rent, it could significantly reduce the rental market for DVD. What impact this might have remains to be seen, but rental chain Blockbuster has already stated that they will "wait to see what the consumer wants" when it comes to DVD. Will most consumers prefer to buy DVDs and put them in the rack next to their CDs? Only time will tell. To date there has been much speculation but I have not seen any market research which answers the question.

One Standard, Multiple Versions
Even though there is now one DVD standard, and even though that standard provides for many different languages and subtitles on one disc, it does not mean that identical discs will be sold world-wide. There will still be NTSC and PAL/SECAM video differences, and at the request of software producers, there will also be a system for specifying which regions of the world a disc can be played in. This is because of the system of releasing movies in the theater and on home video at different times throughout the world. For example, the typical Hollywood movie is released first in the U.S., and then later released in other parts of the world. At some time after the theatrical run has finished in a given country, the movie will be released on home video in that country. This means that the movie may be available on video in the U.S. at the same time (or even before) it is showing in theaters in other parts of the world. It is not hard to image what happens when this occurs: "alternative" distribution networks spring up and discs are shipped from the U.S. and sold overseas in countries where the video is not yet available. This, of course, can have a negative impact on theater attendance in those areas. This currently happens regularly with laserdiscs (LDs) thanks to the availability of multi-standard LD players (those that will play NTSC, PAL, and/or SECAM formats) in Europe. LD is a very small portion of the video market, so the damage done is not all that great, but DVD is seen as a mass market product so the potential for problems could be much greater.

All of this brings us back to the software producers' request for some way of controlling the distribution of DVD discs. Discussions are still ongoing, but at this point it appears that the discs will include a code which identifies the regions of the world the disc is intended to be sold in. DVD players will also be made for a specific region, and the players will check the code on the disc and play it only if it is authorized for the same region as the player. In this way the distribution of discs can be controlled and the transition from film to video in various regions preserved. So, if you were counting on buying a multi-standard DVD player, you're probably out of luck.

Computer Applications
Industry estimates on how quickly DVD sales will take off vary widely. Some observers, who view DVD primarily as a replacement for the VCR, feel that adoption will be slow because the first generation of products will not record. However, this limitation may not be such a major factor in markets such as the U.S. where more than 80% of households currently have a VCR and are thus already equipped for video recording. It is likely that most consumers will view DVD as a supplement to, rather than a replacement for, the VCR. If DVD is to be a replacement for any particular piece of equipment, it would seem that it would first replace the standard CD player in an A/V system (where it will play existing CDs and DVDs), and CD ROM players (where it will play existing CD ROMs and DVD ROMs).

Many companies in the computer industry are already planning to incorporate DVD ROM as the next generation of CD ROM. This could play a major factor in speeding up the format's acceptance, because the computer market changes and adopts new systems much more quickly than the home A/V market. Computer and sound card manufacturers are currently working on products that will accommodate the high quality video and audio that DVD ROM will offer, and the first products should appear by the end of the year. It seems likely that acceptance of DVD ROM as the next generation CD ROM will help to "jump start" the format, increasing initial production quantities, allowing companies to recoup their development costs and take advantage of economies of scale more quickly. This would also help to bring the home PC one step closer to being the complete A/V entertainment and computing system that many computer companies envision for the future.

Audio-Only DVD
Now that the major details of the DVD format have been worked out, there is some discussion of an audiophile-quality, audio-only version of DVD. Because of the large data capacity of the format, it is possible to produce audio-only discs with multiple channels of high quality PCM audio using no audio coding. In fact, there have already been proposals for discs with a minimum of six channels at sampling rates up to 96 kHz and a resolution of 18 to 24 bits. These discs would take the space normally used for video data and instead use it to store all of the extra audio data. This means, of course, that the disc would not contain any video program material. The audio quality of such a disc could be truly superb, and would present a challenge to modern recording equipment to capture multiple audio tracks and produce a 24 bit master that was free from limitations of the recording and production chain.

The idea of a multi-channel music disc is certainly very attractive, as it would allow producers to immerse listeners in a soundfield in a way that was never before possible. This capability could take artistic expression and music production to new levels of creativity and give musicians a way to literally put their listeners in the performance. For these reasons, the DVD disc is an ideal music carrier, and it represents an exciting opportunity for everyone involved in the creation and recording of music. I'm sure that there are many music lovers like myself who are looking forward to the day when they can enjoy their favorite recordings in full bandwidth, wide dynamic range, multi-channel surround sound. For the music business, the introduction of DVD therefore represents a new opportunity for record companies to present their catalogs in a multi-channel format. To date, record companies have not yet started promoting this idea to consumers, and in contrast to the many press releases and comments by companies in the movie industry, there has been relatively little public comment by the music industry on their plans for DVD albums. If DVD succeeds in the way that many people feel it will, it seems inevitable that it will find its way into the mainstream music market. Indeed, the standard video DVD format seems ideally suited to the music video market, where it could deliver superior video quality and multi-channel audio on a variety of playback platforms.

In time, if the cost of DVD falls to a price point near the standard CD, it may encourage growth in the music video market. Record companies could position the music video DVD as a value-added product which also includes interviews with the musicians, a collection of interesting snippets shot during production ("the making of the disc"), behind-the-scenes footage, a live concert clip, or other supporting video material. This would offer the consumers who want more than the standard CD album the chance to purchase the music and video on a format which they could play on their home stereo or A/V surround system, car stereo, portable player, or computer. This will represent quite a change from the situation today, where the music market and the music video market are divided as a result vof incompatible formats (the CD and VHS tape, respectively).

Regardless of the path that DVD takes into the music business, it is clear that the support of the music industry and the music buying public could have a significant effect on the success of the format. To put things into perspective, keep in mind that in 1995 there were about 700 million prerecorded video tapes sold in the U.S., compared to over 1.1 billion music tapes and CDs. As an observer, I think it will certainly be interesting to see how DVD albums are introduced, and to see how the market chooses between DVD and CD releases. One thing seems certain, however: in order for mainstream music buyers to embrace DVD there must be a large selection of software titles and players available, at prices that produce a perceived value which compares favorably to current CDs and players.

Adding DVD to Your System
Now that the audio standards for DVD have been announced and the public is becoming aware that DVD will deliver six channels of audio, there is some uncertainty in the marketplace about exactly how DVD will interface with existing A/V systems. How can 5.1 channel AC-3 signals be used with a two channel stereo system? What about the millions of consumers who have Pro Logic decoders but are not equipped for Dolby Digital playback? Various aspects of these questions have been discussed in past issues of Secrets or in Dolby publications, but now that the availability of DVD is just months away, many A/V dealers have been receiving questions like these from their customers. In the interest of summarizing the available information, I'll briefly discuss the factors involved.

The good news is that a DVD player can be easily added to just about any A/V system. If you can add a VCR (not program it, just plug it in) you can add a DVD player. Most players will simply have left and right stereo audio outputs, a digital audio output (for the digital AC-3 data), and a video output. They can be added to a typical A/V system or television using the stereo audio outputs and the video output, in the same way that one would add an LD player, or a VCR for playback. Remember, DVD does not record (yet), so you only need to hook it up for audio and video playback.

If you have a Dolby Pro Logic Surround decoder (such as an A/V receiver) you can simply connect the DVD player using the regular audio and video outputs. The stereo audio outputs will deliver a Dolby Surround version of the soundtrack which you can decode using Pro Logic, just like current surround video tapes, LDs, CDs, and TV shows. The DVD player will take the 5.1 channel AC-3 soundtrack and mix it down to a Dolby Surround soundtrack. This Dolby Surround soundtrack is then delivered to the left and right stereo audio outputs of the DVD player.)

If you have a newer A/V receiver or surround decoder with Dolby Digital AC-3 and Pro Logic, you can start by again hooking up the regular DVD player audio and video outputs, but in addition, connect the digital audio output of the DVD player to the digital input of the Dolby Digital decoder. This digital link will carry the AC-3 data to the AC-3 decoder in the A/V receiver, and you will be able to enjoy the full Dolby Digital soundtrack.

Dolby Literature
If you would like to read more about any of Dolby's technologies there are a variety of publications available. To request information on any of our technologies you can send an e-mail message to info@dolby.com or leave a voice message on Dolby's Literature Hotline at 415-558-0344. Please be sure to include your name and mailing address in your message and specify which technologies you would like to receive information on. Please note that we have discontinued the Dolby Audio/Video Forum on America Online, and we encourage interested readers to visit our Web site at
http://www.dolby.com.

Bill Barnes

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