Dolby Seeking Growth Via Atmos Music, Gaming, APIs, Says CFO
Dolby Chief Financial Officer Lewis Chew referenced the company’s “virtual cycle” ambition with its fledgling Dolby Atmos Music business, on a Thursday investor call. He likened it to the approach the company took with Dolby Vision in the TV market, which is now included in TVs from nine of 10 top TV makers, with Samsung the exception. The momentum of Dolby Vision and Dolby Atmos in movie and TV content is driving a growing lineup of home entertainment devices, he said.
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With Atmos Music, Dolby created interest in the technology early among artists and developers, hoping that would drive hardware sales, said Chew. The immersive audio technology got early interest from artists including Post Malone, Lizzo and J. Balvin, which led Amazon HD Music to adopt Atmos Music and include it on its $199 Echo Studio 3D smart speaker. The Tidal music service also has Atmos. Dolby has a way to go with other smart speakers, Chew said.
Music is “a big, rich, complex world,” said Chew, saying the company wants to reach a younger demographic and expand their music playback experiences beyond just “good enough.” Growing the Dolby Atmos Music business may also be a road into additional markets such as automotive, Chew said. He called the car “the largest traveling mobile device” that’s “as much computer and entertainment as it is engine and tires and transmission, and we want to be there.” Without Atmos Music, “it might be harder to make [the] argument” for Dolby’s role in the automotive space, he said.
In gaming, Dolby had a presence in previous generations of Xbox, and the most recent Xbox Series X and S consoles have Dolby Vision and Atmos, but it didn't make it into Sony's PlayStation 5 system. A company focus, Chew said, is figuring out how to get the gaming industry to “lean more” into Dolby technology.
On the nascent Dolby.io developer platform, currently only available for audio, Chew said Dolby is making application programming interfaces for developers to embed in their apps used for training, communications, distance learning, telehealth, podcasts or other areas where better quality audio is needed. “They’re trying to sell something where communication is not the primary thing they’re selling,” he said.
Tools are available for recorded and interactive media, said Chew. “There’s a ton of content out there,” aside from Hollywood movies and TV shows, “that we could be improving the audio and video on,” he said. He called it a “low-touch approach” with a trial period. Developers are “a whole new market for us." The .io business model is different for Dolby, giving it a way to diversify beyond its licensing structure with a recurring revenue model. A developer that uses a Dolby API in its app on an ongoing basis pays the company based on usage vs. core Dolby revenue from royalties per unit sold.