Dolby Diversifying Into Podcasts; Box Office Skewing 'Premium', Says CEO

As movie theaters begin to reopen after a year of being shuttered for COVID-19, the box office is skewing more heavily toward premium experiences, said Dolby CEO Kevin Yeaman on the company’s fiscal Q2 earnings call Tuesday: “We continue to believe that when people do go back to the movies," they will want to experience theaters "in the best possible way,” he said.

Dolby added a Dolby Cinema partner in China, and four new Cinema locations opened during the quarter, said Yeaman. The company sees things improving through the rest of the year at a “somewhat uncertain” pace, he said. About 90% of Cinemas are opened globally with capacity restrictions.

Q2 revenue fell by $32.2 million to $319.6 million for the quarter ended March 26 on effects of COVID-19 across markets within Dolby’s licensing, products and services business, the company reported. Implications of the coronavirus on future results “remain uncertain” as macroeconomic effects of global events “may impact supply chain activities and consumer demand for electronic products.” Revenue guidance for fiscal Q3 is $260 million-$290 million. The stock closed 6.3% lower Wednesday to $96.98.

Dolby is enabling a broader range of content through its technologies, said Yeaman, referencing deeper adoption in existing device categories and use cases in new categories. Dolby Atmos for music is enabling a “significant step forward in how people can enjoy their favorite songs,” he said. Lucid Motors’ Lucid Air is the first car to include Dolby Atmos, an example of how the company is creating more ways for consumers hear music in Atmos, he said. On the content side, Dolby Atmos has “strong engagement” with artists, including Taylor Swift, Lady Gaga and Megan Thee Stallion, said Yeaman. Streaming services Tidal, Amazon Music HD, Hungama in India and Anghami in the Middle East stream music in Atmos, he said.

Other areas for Atmos expansion are in mobile, PCs and headphones. Dolby is targeting Atmos and Vision to gaming, with Microsoft’s Xbox the first gaming console to support the combined Dolby experience, he said. Microsoft and Bang & Olufsen released headphones supporting Dolby Atmos this quarter, he said, and the first esports event, Blizzard Entertainment's BlizzConline, allowed some matches in Dolby Vision and Dolby Atmos to be experienced on PCs and consoles.

This quarter, Earshot, a podcast service in India, became the first podcast app to support Atmos and will support multiple languages. Xiaomi launched its first mobile phones supporting Dolby Vision and Dolby Atmos, joining Apple 12 iPhones. Recently launched flagship smartphones from Samsung, Oppo and Sony have Atmos, he said.

Last week, Dolby completed an integration with Box.com and Dolby.io, Yeaman said, which allows Box users to improve the quality of their audio directly from where their files are stored using Dolby media processing application programming interfaces. Dolby.io APIs are being used in online learning, for influencers and creators to connect with fans, and a medical team has used APIs for livestreaming, Yeaman said. Where real-time interactions come together with recorded media, "we can uniquely provide comprehensive solutions by embedding both our interactivity and media APIs,” he said.

Currently, Dolby media APIs are focused on audio enhancement, but “as we look at our road map, we see opportunities to bring our Vision and imaging expertise to that platform,” Yeaman said. Dolby.io launched in virtual mode, but the company has been participating in more live events, including South by Southwest and a university hackathon, Yeaman said: “Some of our wins have drawn attention, which brings more people in to explore.”