Dolby, DTS Forecast Similar Numbers for Standalone Blu-ray Player Sales, but for Slightly Different Periods

DTS is projecting Blu-ray player sales of 15 to 20 million units for the year ending Dec. 31, up from 10 million in 2009, DTS CEO Jon Kirchner said. Meanwhile, Dolby is forecasting shipments of 15 to 20 million units for its fiscal year ending Sept. 30, CEO Kevin Yeaman said on a conference call with analysts. Both companies agree the industry is poised for growth this year.

"We obviously look at this from a number of data sources, as well as the channel and speaking to people,” Kirchner said. “As we think about a 12-month period, we believe that the results will come in well within that range” of 15 to 20 million units.” Yeaman projected standalone Blu-ray player sales of 15 to 20 million units in the company’s fiscal year ending Sept. 30. Dolby officials weren’t immediately available to comment Monday on the discrepancy in unit shipments estimates.

With increased sales of standalone Blu-ray players, there won’t be any “major deterioration” in 2010 in DTS’ royalty rates of 50 to 70 cents per unit and “possibly not even” in 2011, Kirchner said. “We're not selling Blu-ray players in the $30 to $40 range today like you're seeing happen with DVD,” he said. “At some point, there clearly will be some movement, but how it ultimately blends out remains to be seen because the dynamics in this particular market are slightly different than they are for DVD given the value proposition around Blu-ray."

In PCs, DTS commands a 40- to 50-cent royalty for Blu-ray drives, Kirchner said. While the Blu-ray PC market “developed more slowly” than expected in 2009 on global shipment of 5 million units, that’s expected to double this year, Kirchner said. With low-end pricing for Blu-ray-capable notebook PCs hitting $600 in recent months, the bulk of growth in unit sales is expected to arrive in the second half of this year, Kirchner said. Drive supplier Lite On projected Blu-ray accounting for 10 to 15 percent of its sales this year. Blu-ray-related revenue represented 30 percent of DTS’ $21.2 million in Q4 revenue, up from 22 percent a year earlier, Chief Financial Officer Mel Flanigan said. It was 21 percent of DTS’ annual revenue of $77.7 million, up “substantially” from a year earlier, he said.

In addition to standalone Blu-ray players, the technology will ship in 12 to 14 million PS3 consoles and 9 to 11 million PCs, Flanigan said. With the PC industry is expected to ship 300 million optical drives this year, Blu-ray’s share remains small. “Hopefully, we'll be encouraged as the year goes on and people will see an improvement in the market,” Flanigan said. DTS’ push in PCs will benefit from the release of its Premium Suite software combing DTS HD Master Audio with Surround Sensation UltraPC. Among DTS’ first customers for the Premium Suite is Onkyo’s Sotec brand PCs that ship in Japan later this year.

DTS also is moving to get decoders built into TVs. Hisense has included DTS in an Internet-capable TV it sells in China. DTS also reached agreement with Samsung to put its Digital Surround technology into TVs. Samsung has a pact with Dolby to make Dolby Digital and Pulse available in its TVs starting in Germany and expanding worldwide, Dolby officials said. Dolby Pulse, designed around High-efficiency AAC (HE AAC), lets broadcasters deliver stereo and 5.1-channel audio at low bandwidth rates while delivering high-quality audio. Dolby has claimed to have a 80 percent install rate in TVs in Europe for its technologies.