http://www.foxbusiness.com/markets/2017/09/14/why-apple-finally-embraced-dolby-vision.html
Why Apple Finally Embraced Dolby Vision
Published September 14, 2017
Thanks to Apple, it's been a great week for Dolby Laboratories investors. Dolby
shares are up more than 15% over the past four days, including a nearly 10% pop
on Wednesday alone after the folks in Cupertino confirmed that several of their
newest products would feature Dolby Vision technology. More specifically, Dolby
Vision will be incorporated into Apple's new iPhone 8 and 8 Plus, the
higher-end iPhone X, and the new 4K Apple TV set-top box.
According to B. Riley analyst Eric Wold, who reiterated his buy rating on Dolby
shares after the announcement, Apple's embrace "clearly boosts the importance
of Dolby Vision technology so soon after its launch."
Why now?
Dolby Vision isn't exactly "new" -- the company first introduced its
cutting-edge visual-enhancement technology in early 2014. And Dolby Vision has
wowed its reviewers by enabling more vivid colors, brightness, and contrast to
more closely mimic how our eyes see the world.
But why wouldn't original equipment manufacturers (OEMs) simply rush out and
adopt Dolby Vision right away? From Apple's perspective, there was likely one
big problem preventing the move until now: namely, a lack of content mastered
and color-graded in Dolby Vision to merit Apple shelling out tens of millions
of dollars for the right to include the technology in its massively popular
product lines.
Gaining momentum
The first TV sets to incorporate Dolby Vision only started to trickle into
stores a little over a year after its initial launch. But it wasn't until early
2015 that Dolby Vision truly started to gain momentum with content providers.
Starting in January 2015, Dolby announced a collaboration with Warner Bros.
Home Entertainment to develop a "steady pipeline" of films mastered in Dolby
Vision throughout the year. Shortly thereafter, Netflix announced it would
begin streaming Dolby Vision content later that fall. Then, a few months later
in April 2015, both AMC Entertainment and Disney followed suit -- the former
through a commitment for Dolby Vision-enabled laser projectors at hundreds of
new AMC movie theaters built through 2024, and the latter with a promise to
bring the first Dolby Vision titles to theaters around the globe starting that
summer.
Dolby Vision only continued to pile on new customer wins in the months that
followed, including commitments from both MGM Studios and Universal Pictures in
2016 to bring their own slates of Dolby Vision content to home
entertainment-distribution platforms. Then, Lionsgate, Universal, and Warner
Bros. followed in early 2017 with renewed promises for Dolby Vision content in
their respective Ultra HD Blu-ray catalogs.
All the while, this accelerating momentum gave leading hardware manufacturers
from LG to Sony, Vizio, and Philips the motivation they needed to develop their
own Dolby Vision-enabled electronics. LG, for its part, became the first
company to incorporate Dolby Vision into a smartphone with the launch of its G6
device earlier this summer.
Enter Apple
Curiously, Apple archrival Samsung has opted not to use Dolby Vision in its own
TVs or mobile devices, instead favoring the competing, royalty-free HDR10+ open
standard.
That said, according to Piper Jaffray analyst Michael Olson, Apple's business
alone could add as much as $35 million per year to Dolby's top line. But
considering so many leading content providers and OEMs have already given their
seals of approval to Dolby Vision, that's a small price to pay for Apple to
differentiate its latest products with such a well-known name and widely
adopted visual technology.
Steve Symington has no position in any of the stocks mentioned. The Motley Fool
owns shares of and recommends Apple, Lions Gate Entertainment Class A, Lions
Gate Entertainment Class B, and Netflix.
