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Manufacturer's Report - Dolby Surround Sound Update #6 - June, 1996

By Bill Barnes

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The last several months have seen unprecedented growth in the home theater market. According to the EIA's Consumer Electronics Manufacturer's Association (CEMA), 1995 was a somewhat disappointing year for the sales of audio equipment overall. Even though total U.S. sales of $8.31 billion were a record, this figure was 5% below what had been estimated for the year. The actual sales increase over 1994 was 2.7%, with most of the growth due to a 13.3% increase in the separate components category, which grew to $1.91 billion. The EIA reported changes of -0.4% for portable audio, +13.3% for components, -1.5% for systems, and +1.7% for after market autosound. CEMA credited home theater for the growth in component sales, with CEMA President Gary Shapiro describing home theater as a "skyrocketing product category" and adding, "If you find there is less traffic on the road in 1996, you can probably thank home theater manufacturers for solving part of that problem." One of the strongest selling products in the component category was the surround sound processor, which grew 23% for the year 1995 to $503 million in total sales. Overall, the entire category of home theater audio components grew an impressive 45% in 1995, to $755 million.

Our own statistics reflect this trend, with over 5 million Dolby Surround decoders sold in 1995, up 33.2% from 1994. The last half of 1995 was particularly good for Dolby Surround decoder sales, which were up 43.6% over the last half of 1994. This brought the total number of Dolby Surround decoders in the market to 20 million by the end of 1995. The owners of these surround decoders continue to have a wide variety of Dolby Surround television shows to choose from, with new series, such as "Second Noah" on ABC, and special events such as the upcoming Olympics, being added on a regular basis.

CD ROMs and Video Games:
As reported in our last update, the use of Dolby Surround for video games and CD ROMs has been steadily gaining popularity. Several new titles have been released in the last six months, including "Wing Commander IV", "Assault Rigs", and "Descent II". This brings the total number of Dolby Surround games and CD ROMs to more than 21, including titles from companies such as Argonaut, Electronic Arts, Interplay Productions, Jaleco, Ocean Software, Prolific Publishing, Sony Psygnosis, and Voyager.

The Altec Lansing ACS500 Dolby Pro Logic decoder for PCs, which we announced in the last update, has made its way into the market. In addition, Altec Lansing has introduced a lower cost Pro Logic unit, the ACS400. Other companies are also planning to introduce Pro Logic surround decoders for PC applications later this year.

Dolby Surround Multimedia:
The introduction of Dolby Surround Multimedia, Dolby's surround sound system tailored for use with computers, combined with the upcoming release of DVD ROM titles, has generated new levels of interest in Dolby Surround within the computer industry. The first Dolby Surround Multimedia system to use 3-D DSP audio processing to create a surround effect from two speakers was announced in February of this year by Texas Instruments and Victor Company of Japan, Ltd. (JVC). The system uses the Texas Instruments TMS57052 DSP IC which combines a Dolby Pro Logic decoder and JVC's 3D-Phonic technology to create a three dimensional soundfield using just two speakers. Volume production of the Texas Instruments IC began in April. Dolby is currently working with a number of other companies on incorporating their own 3-D DSP audio processing into Dolby Surround Multimedia systems, and we expect to see these products appear on the market within the coming year.

Dolby Surround Multimedia received a big boost recently with the announcement that Dolby is working with both Microsoft and Intel to bring high quality surround sound to home computers. Both Microsoft and Intel envision the computer as a high quality audio/video entertainment product, and the success of home theater has shown that surround sound is a requirement for such a product. In April, Microsoft and Dolby signed a letter of intent to jointly develop technologies and specifications to support the use of Dolby's surround sound systems, including Dolby Digital AC-3 technology for multichannel audio in the PC environment. The announcement of the alliance was made at the Windows Hardware Engineering Conference (WinHEC 96) held in San Jose, CA, in April. At the conference, Microsoft also demonstrated a DVD ROM movie clip on a PC using the Microsoft ActiveMoviet API and Dolby Digital technology. Carl Stork, director of Windows platforms at Microsoft, stated that "Bringing the PC to the home entertainment center requires giving it the best possible audio abilities. With the support of Dolby - the leader in quality audio standards - we're working to make that happen."

In addition to the recent demonstrations by Microsoft, Dolby has also begun working with Intel on developing surround sound systems for next generation computers. It is clear that in the near future computers will need to have the processing power to decode both MPEG-2 video and Dolby Digital AC-3 audio, and Intel wants to ensure that this processing capability is provided.

Dolby Digital Update:
Interest in Dolby Digital AC-3 has intensified significantly over the past several months, with many new companies beginning the design of decoding ICs and products. Much of the additional interest is due to the announcement of the DVD audio standards in mid-December of last year, which specify the use of Dolby Digital AC-3 for the delivery of multichannel soundtracks. The following section contains highlights of recent Dolby Digital activity.

The New Dolby Digital Name:
Companies involved in the development of products with Dolby Digital AC-3 technology were recently notified of the decision to refer to the consumer AC-3 system as Dolby Digital instead of Dolby Surround AC-3, and the conversion to a new name and logo is now underway. The new Dolby Digital logo should appear on all DVD players from their initial introduction this Fall, and other existing products such as set-top decoders and A/V amplifiers should use the new logo for any new designs. We expect that this change will significantly reduce market confusion, because there will now be one, consistent logo which will appear on products which use the Dolby AC-3 coding system both in the theater and in the consumer market.

Laserdisc:
The number of laserdiscs with Dolby Digital audio has continued to increase since our last update, and as of mid-June 1996, there were a total of 82 titles that had been either released or announced for future release. These include such hit movies as Braveheart, Forrest Gump, and the popular James Bond film, Goldeneye. The following list contains the latest laserdisc titles with Dolby Digital soundtracks.

The Abyss 20th Century Fox TBA
Alien 20th Century Fox 6-Dec-95
Aliens 20th Century Fox 6-Dec-95
Alive/Alive: 20 Years later Touchstone Pictures 31-Jul-96
Amadeus Paramount 5-Dec-95
Batman Forever Warner Bros. 30-Oct-95
The Beach Boys: An American Band Pioneer Entertainment 19-Dec-95
Biodome MGM/UA 11-Jun-96
Black Sheep Paramount 6-Aug-96
Braveheart Paramount 12-Mar-96
Bridges of Madison County Warner Bros. 1-May-96
Broken Arrow 20th Century Fox 31-Jul-96
Clear and Present Danger Paramount 31-Jan-95
Congo Paramount 21-Nov-95
Crimson Tide Hollywood Pictures 14-Nov-95
Cutthroat Island Carolco 22-Apr-96
Day of the Dolphin New Line 21-Feb-96
Days of Heaven Paramount 18-Jun-96
Dead Presidents Hollywood Pictures 19-Jun-96
Die Hard 20th Century Fox 29-Nov-95
Die Hard II: Die Harder 20th Century Fox 20-Dec-95
Die Hard with a Vengence 20th Century Fox 17-Jan-96
Don Juan DeMarco New Line 25-Sep-95
Dr. Zhivago MGM/UA 21-Nov-95
Drop Zone Paramount 12-Jun-95
Eye for an Eye Paramount 16-Jul-96
Father of the Bride II Touchstone Pictures 26-Jun-96
Fiddler on the Roof MGM/UA TBA
Forrest Gump Paramount 27-Apr-95
Free Willy 2 Warner Bros. 13-Nov-95
Get Shorty MGM/UA 28-May-96
Goldeneye MGM/UA 28-May-96
Guys and Dolls Hallmark 24-Jan-96
Heat Warner Bros. 18-Jun-96
Highlander Republic Pictures TBA
In the Mouth of Madness New Line 14-Jul-95
Interview with the Vampire Warner Bros. 5-Jun-95
Jade Paramount 20-Feb-96
Judge Dredd Buena Vista Pictures 13-Dec-95
A Kid in King Arthur's Court Buena Vista Pictures 14-Feb-96
Les Miserables Warner Bros. 21-May-96
The Lion King Walt Disney Productions 18-Sep-95
A Little Princess Warner Bros. 18-Sep-95
Lord of Illusions MGM/UA 16-Jan-96
The Madness of King George Samuel Goldwyn 25-Sep-95
Mortal Kombat New Line 10-Jan-96
Mr. Holland's Opus Hollywood Pictures 16-Jul-96
My Family New Line 7-Nov-95
Nick of Time Paramount 21-May-96
Nixon Hollywood Pictures 23-Jul-96
Outbreak Warner Bros. 4-Aug-95
Pacific Surf - Mood Tapes Ron Roy Productions 1-Apr-96
Powder Hollywood Pictures 19-Jun-96
Pulp Fiction Miramax TBA
Rainman MGM/UA 25-Jun-96
Richard III MGM/UA 18-Jun-96
Rob Roy MGM/UA 23-Oct-95
Rolling Stones Live at the Max IMAX TBA
Sabrina Paramount 11-Jun-96
The Santa Clause Walt Disney Productions 6-Dec-95
Scarlett Letter Hollywood Pictures 8-May-96
Seven New Line 27-Mar-96
Showgirls MGM/UA 3-Jan-96
The Sound of Music 20th Century Fox TBA
Spaceballs MGM/UA 31-Mar-96
Species MGM/UA 19-Dec-95
Star Trek: Generations Paramount 17-Jul-95
Stargate Carolco 14-Mar-95
Strange Days 20th Century Fox TBA
Tenchi Muyo In Love Pioneer Entertainment 30-Jul-96
That's Entertainment I,II,III (Boxed set) MGM/UA 1-May-96
Three Wishes Rysher Entertainment 4-Jun-96
Tom and Huck Walt Disney Productions 15-May-96
Top Gun Paramount 9-Oct-95
True Lies 20th Century Fox 7-Feb-95
U2: Rattle and Hum Paramount 9-Oct-95
Unstrung Heroes Hollywood Pictures 8-May-96
Video Essentials ISF-Joe Kane Prods 12-Jun-96
Virtuosity Paramount 13-Feb-96
Waiting to Exhale 20th Century Fox TBA
Wild Bill MGM/UA 28-May-96
The Wild Bunch Warner Bros. 5-Dec-95

 

In addition to new software titles, there has also been an increase in the number of laserdisc players which feature the Dolby AC-3 RF output needed to play back the Dolby Digital soundtrack. Several companies have introduced new players in recent months, and the list of manufacturers has grown to include Denon, EAD, Marantz, Mitsubishi, Pioneer, Runco, and Yamaha, with at least two more companies expected to announce models in the near future.

Dolby Digital Decoders:
Many new surround decoders with Dolby Digital have been introduced in the past six months, and consumers now have a variety of models to choose from. In addition to models by Audio Design Associates (ADA), Denon, Enlightened Audio Designs (EAD), Meridian, Pioneer, and Yamaha which were discussed in our last update, several companies have brought new models to market or announced the upcoming introduction of their first models with Dolby Digital. These companies include Adcom, Harman/Kardon, JBL, Kenwood, Lexicon, Madrigal, Marantz, Perreaux, Sony, SoundStream, and Technics. At last count there were at least 27 different models which had been announced.

DVD:
As noted in the introduction to this section, the audio specifications for DVD, the Digital Versatile Disc, have been announced (these are contained in version 0.9 of the standard). The completion of the audio portion of the standard has allowed manufacturers to move ahead with product designs and has fueled increased interest in the Dolby AC-3 coding system. The complete DVD standard (version 1.0) is expected to be released around the beginning of July.

DVD Software:
In recent months there has been much talk of issues such as copy protection and regional coding, and some sources have speculated that these issues may delay the introduction of DVD software. There has been some disagreement between the record and film industries and the computer industries regarding copy protection on DVD, and some groups are pushing for digital copy control legislation to be passed in Congress. On a technical level, this issue is simple to solve and involves the addition of a few "copy control" bits to the data stream which can be used to indicate whether no copies, one copy, or unlimited copies are allowed from a disc. In fact, it was stated at the recent International Recording Media Association (ITA) annual seminar held March 13-17 in Phoenix Arizona, that these provisions, along with provisions for regional coding, have already been added to the DVD specification. In reality it appears that the copy control provisions will go well beyond this simple system, and will probably involve systems to prevent copying to video tape, along with anti-piracy provisions such as ID codes on the disc which identify the disc manufacturer.

The regional coding issue (regional coding is a system which would allow disc manufacturers to control which regions of the world a disc could be played back in) can also be solved simply from a technical standpoint. It too would involve the addition of a few "region bits" in the data stream which would be used to determine the permitted playback regions for a particular disc. Once again, the time consuming portion is the process of deciding how many regions should be used and agreeing on the format of the bits. Industry reports indicate that anywhere from 5 to 12 regions have been proposed, with 7 to 9 likely in the final specification. And, of course, once the regions are decided, all of the hardware manufacturers need to agree to follow the regional coding system.

In spite of these last minute issues, I personally am confident that the first DVD discs will appear in the market on schedule this September or October, 1996, along with the first players. I'll even go out on a limb and say that the number of titles available by the end of the year will probably be around 100. In spite of the last minute copying and region control issues, disc manufacturers have been making DVD discs for a few months now, and one major supporter has already produced well over 1 million discs. In fact, at the recent Replitech trade show held in San Jose California, June 4-6, several companies displayed DVD mastering and pressing equipment, and a few were actually making DVD discs on the show floor. Jim Lance, executive vice president at Pioneer Video Manufacturing in Carson, California, said that his plant expects to start replicating DVD discs in August of this year with a capacity of 1.4 million discs per month, growing to 2.5 million by January of 1997. It is apparent that the manufacturing tools and capacity are available, and as soon as the copy and region issues are resolved (this is anticipated soon) it will be possible for many titles to appear in the market quickly.

DVD Hardware:
The design of the first DVD players is largely finished, with only minor software updates to accommodate region and copy control systems remaining. The major hardware supporters are still planning for a September or October, 1996 introduction, with several companies planning to have players available by the end of the year. According to recent press releases, Matsushita, Philips, Pioneer, Samsung, Sony, Thomson, and Toshiba are expected to be among the first to bring products to market, with prices starting at around $500. In most cases these DVD players will provide traditional stereo analog outputs along with a digital output for the AC-3 bit stream, but some companies, such as RCA, are planning to produce players with 6 analog outputs (left, center, right, left surround, right surround, and low frequency effects). In these cases there will be a companion amplifier offered which will accept the six inputs.

Several DVD supporters announced details of their upcoming products at the CES Digital Destination show in Orlando Florida, this May. Pioneer announced three models, the DV-500 priced at $599, the combination DVD-LD player DVL-700 priced at $999, and the Elite brand Pioneer DVD-LD player DVL-90 planned at $1,750. Panasonic also announced the DVD-A100 which has a digital audio output for use with an external Dolby Digital processor, and a step-up model DVD-A300 which has a built-in Dolby Digital decoder and universal remote. Thomson also announced the RCA RC5500P, due out this Fall and priced at $599. Toshiba has announced their first two DVD players, the SD-3006 and SD-1006, which are scheduled to reach the marketplace this Fall at suggested retail prices of $699 and $599, respectively.

DVD ROM:
The computer market has become quite large in recent years, and it represents a great opportunity for DVD ROM products. In the U.S. there were 8.4 million computers sold in 1995, an increase of 25% over 1994, with $10.9 billion in sales for the year. Many companies in the computer industry are including the DVD format in their plans because the DVD ROM version offers a significant increase in storage capacity over current CD ROMs. Along with an increased storage capacity, the addition of DVD ROM to new computers will help to bring the PC one step closer to being the complete A/V entertainment and computing system that many computer companies envision for the future. And, including DVD ROM drives in new computers will not cause compatibility problems with existing disc software because the new drives will play existing CD ROM discs.

DVD ROM drives from Matsushita, Mitsubishi, NEC, Pioneer, and Toshiba are expected to appear in the market late this year or early next year at prices below $500. Apple Computer Corp., whose Macintosh computers are used to generate more than two-thirds of the multimedia content for CD ROM and approximately 40% of all multimedia on the World Wide Web according to International Data Corp., recently stated that they will also support Dolby Digital audio in their DVD ROM products. Compaq has also announced that they will have DVD ROM hardware on the market this year. In addition, Zoran Corporation recently introduced the industry's first reference design board for DVD ROM applications. The new DVD4PC board integrates Dolby Digital audio processing, a PCI multimedia controller, Windows95 and Windows 3.1 software drivers, and an SGS-Thomson MPEG-2 decoder on a single PCI card.

In the DVD ROM software market, Activision is moving to position itself as an early DVD ROM software leader. The company is planning for a repeat success it enjoyed with Windows 95 applications, where it was one of first to bring products to market. Activision intends to introduce 3 DVD ROM titles in the third quarter, even before DVD ROM drives are expected to be available.

Digital Television:
Digital television standards committees in the U.S. have continued to make steady progress in recent months. In the Fall of 1995 the FCC's Advanced Television Service Advisory Committee unanimously recommended to the FCC that it adopt the ATSC digital television system, incorporating Dolby Digital AC-3 audio, as the U.S. standard for both high definition and standard definition broadcasting. The final stage of the approval process, FCC rule-making, got underway in January, 1996 and is expected to take approximately six months. There has also been continued interest in the use of Dolby Digital in digital cable systems. It was recently reported that Time Warner will issue a request for proposals for 500,000 to 1 million digital set-top decoders for use with its digital cable systems. Time Warner specified that the decoders must have real-time, 2-way capability, high bandwidth, and incorporate MPEG-2 video and Dolby Digital AC-3 audio processing.

Integrated Circuits:
Out of the 60+ companies that have signed Dolby Digital AC-3 IC development agreements, VLSI Technology Inc. and Hyundai have become the most recent to announce their plans. VLSI plans to develop Dolby Digital AC-3 decoding ICs for digital set-top box and digital video disc applications. In making the announcement, Herbert Reiter, director of product marketing for VLSI's Consumer Digital Entertainment Group, said "Dolby holds a leading position in high-performance sound technology. We believe Dolby Labs' Surround AC-3 offers the highest multichannel digital sound quality available today. This AC-3 license allows our silicon products to support state-of-the-art sound for applications in these emerging digital video markets." VLSI Technology has been providing ASIC and ASSP ICs for many years, and over the past twelve months has become one of the leading IC suppliers to the worldwide digital video market. They also announced that they are working with companies worldwide, developing players for the DVD market, as well as multiple-use set-top boxes for satellite or cable applications in combination with the digital video disc. Hyundai also recently announced the HDM8111P PrAVO IC, a single-chip MPEG-2 video and Dolby Digital decoder for DVD applications. It integrates several of the required DVD player functions, and replaces the four ICs which are currently required with a single IC.

Dolby Digital on Film:
The growth of the Dolby Digital film program has continued at a rapid pace in the past six months, bringing the number of Dolby Digital equipped theaters to nearly 5,000. There have also been many new movies released in the format, and there are currently more than 400 Dolby Digital titles which have been released or announced. One indication of the format's success is the number of Dolby Digital film prints which have been made. In 1995 there were more than 400,000 prints made, approximately 200,000 in the U.S. and over 200,000 internationally. The Dolby Digital film program gained another strong supporter this February, when PolyGram Filmed Entertainment announced that they will release all future titles in Dolby Digital. PolyGram joins Warner Bros., Disney, and 20th Century Fox in releasing all titles in Dolby Digital.

Dolby Literature:
If you would like to read more about any of Dolby's technologies there are a variety of publications available. Many of these are available on our Web site at
http://www.dolby.com, and we encourage interested readers to visit our Web site for further information. Dolby literature may also be requested by sending an e-mail message to info@dolby.com or by leaving 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 are interested in.

Bill Barnes

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