Bringing Consumers a Premium Audio Experience

Ellis Reid Sr. Industry Marketing Manager Dolby Laboratories

Dolby’s History of Innovation

noise reduction

5.1-channel digital audio

HD audio for PCs

7.1-channel cinema sound

surround sound for headphones

home theater mobile entertainment

real-time 5.1 broadcast

Dolby® AtmosTM

cinema sound

3D Digital Cinema

P R O P R I E T A R Y + C O N F I D E N T I A L 3

Dolby became the de facto cinema experience Since 1977, every film that won Best Sound at the Academy Awards was released with Dolby audio

10 Academy Awards to Dolby Laboratories

28,000+ Motion Pictures have been released using Dolby technologies since Star Wars

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P R O P R I E T A R Y + C O N F I D E N T I A L 4 4

Dolby is the de facto standard for HD broadcast

Since launch in Spring 1997 more than 12.5 billion DVDs have been shipped

Dolby Digital technologies have been incorporated in over 792 million DVD players and over 117 million Blu-ray players

9 Emmy Awards to Dolby Laboratories

P R O P R I E T A R Y + C O N F I D E N T I A L 5

Mobile is NEXT! Bring MOBILE ENTERTAINMENT to LIFE….

…and deliver the audio experience consumers will pay for

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29% of consumers watched paid content on a handheld device in 2011*

39% of consumers are willing to pay more for higher quality audio*

*J.D. Power and Associates, Consumer Electronics Assoc. 2011 studies

The mobile entertainment experience is driving multiscreen video as a focus area for broadcast service providers.

Regular monthly viewers of streaming TV shows and movies on smartphones are forecast to grow to over 412 million by the end of 2016.

By 2017 68% of U.S. consumers in broadband households will watch premium video on their mobile devices..

The use of video on smartphones has doubled from 2012 to2013 due to the availability of Wi-Fi. Today, mobile video accounts for 59% of all mobile data usage.

IDC Worldwide and US Smartphone and Media Tablet Mobile Video Users 2012-2016 Audio Quality’s Growing Value for Mobile Entertainment Smartphone, 2013 Parks& Assoc.

Streaming Video Consumption: 2012–2017, Cisco 2012

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Sound Impacts a User’s Video Experience

Sum response is greater than component parts.

Driver and Noesselt, 2007, Neuron

Sound Amplifies Visual Response at a Neural Level

Image Only Sound Only Sound + Image

Highest correlation with picture quality satisfaction is audio quality satisfaction (compared to Brand, screen size & warranty) Correlation is .806 (-1 to +1)

Audio fidelity must be guaranteed for good subjective audio-visual experience. Small bitrate increase in audio can result in far greater value than increasing the video bitrate.

VEVO president and CEO Rio Caraeff says that the sound quality is critical for the success of any streaming venture, music or otherwise.

IDC: ConsumerScape 360 EBU Broadcast Seminar, Audio Visual Quality on the Move 2011

Streaming Media Magazine interview August – September issue 2011

Audio Makes Watching a Video an Experience

“We’ve seen that, historically, audio has never been prioritized over video. Our studies have shown that if you take poorly compressed video but pair it with high-quality audio, people perceive the video to be of higher quality than it actually is.”

Audio Quality Improves Perceived Video Quality

“Long ago we realized sound was your ‘special friend’ because sound does at least 50% of the job.”

— Francis Ford Coppola Director

Audio Engineering Society “The Influence of Individual Audio Impairments on Perceived Video Quality” 2010

Higher quality audio can compensate for degradations in the video image. Less likely to consider an image impaired with higher quality audio. Viewers perception of the video quality is higher when audio quality is not impaired.

2nd International Symposium on Wireless Communication Systems 2005

The beneficial effect of higher audio quality on perceived video quality is particularly noticed in fast moving sequences. In conditions when the video quality is low (e.g., a low bit rate image) higher audio quality can significantly improve the perceived video quality.

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Consumers Value and Expect Premium Audio

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Consumer expectations are set by the cinematic surround sound experience they get from the HD Broadcast and Blu-ray/DVD experience in their living room today

Multiscreen consumers rank audio quality as an important factor when buying a playback device

“First, the quality of audio when watching video—whether on a smart TV, tablet, or smartphone—matters.” TDG Report

“Relevance of Audio Quality in Smart TV, Tablet, and

Smartphone Purchases”

0

10

20

30

40

50

60

70

80

90

SMART TV TABLET SMART PHONE

percentage

Importance of Sound Quality in Multiscreen Device Purchases

Important

Highly Important

Extremely Important

Opportunities and Challenges for Service Providers

>100 Fold Increase in Workflow Complexity

Reduced OPEX (BYOD)

Improved Subscriber Reach

Higher User Satisfaction and Reduced Churn

Higher ARPU

MULTISCREEN BROADCAST & PAYTV

COHESIVE BEST EXPERIENCE

ON ANY SCREEN

OPPORTUNITIES CHALLENGES

Devices, Content Rights, DRM Management, OS Support, APPS, Regulations, Interoperability

ETC.

Premium Service Delivery Drives Converged Broadcast Workflows

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Complexity = Ecosystem x Protocol x DRM x Client x Device

HLS

Smooth

DASH

CFF

TS DVB CAS STB Client IPTV/DBS/Cable 4

432+

Do service providers have enough time to care about audio?

Growing Workflow Complexity

Codec Scalability

and Efficiency

Adaptive Bit Rate

Support and Ad

Insertion

One Stream for All

Devices

Device playback decoder behavior

Consumer Device

Penetration Consumer Experience

Regulatory Compliance

Industry Demand

Operational Requirements

Business Requirements

Service Provider Audio Considerations

Service Providers Need an End-to-End Solution

DISTRIBUTION PLAYBACK CONTENT CREATION Work with partners and provide

tools for content encoding Provide and standardize formats

for content distribution Provide products and testing to

deliver the experience on devices

Ecosystem and Workflow Support

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Transcoding DRM CDN

CMS Cloud

Codec Efficiency and Scalability

High-efficiency performance Excellent quality (MUSHRA of 80) 5.1ch audio @ 192 kbps

Scalability for higher quality levels and more channels Excellent quality (MUSHRA of 80) 7.1ch audio @ 384 kbps Perceptually lossless 5.1ch audio @ 768 kbps

Support for all channel configurations and target quality levels

32k 64k 384k 2M 640k

mono 2.0 5.1

7.1

HE AAC 5.1

2.0 mono

Poor

Low

Medium

High

Best

QoE

Client Bandwidth

Low Medium High

AAC 2.0

ABR Video

ABR DD+ 2.0/5.1

HUGE GAP …

LEAST COMMON DENOMINATOR

Adaptive Bit Rate Support for Audio

5.0Mbps

QoE

QoS

384Kbps

3.5Mbps 192Kbps

1.5Mbps 192Kbps

1.0Mbps 128Kbps

0.8Mbps 96Kbps

0.0Mbps 32Kbps

5.1

5.1

5.1

5.1

2.0

1.0

MPEG DASH APPLE HLS

MSFT SMOOTH STREAMING

Enhanced QoE/QoS with Adaptive Bit Rate Seamless Ad Insertion With 5.1<>2.0 switching

Seamless Audio Bit Rate and Channel Configuration Switching

44

142

Advertising minutes per hour

Program

Network ads

Local ads

5.1

2.0

5.1 5.1 5.1

2.0

• Cable operators own ~2 minutes per hour of ads

• Unicast enables personalized ad insertion $

• But … Ad Insertion must be “seamless”

Seamless Multiscreen Ad Insertion Support

7.1ch surround

5.1ch surround

2.0ch stereo

Enhanced stereo or surround for mobile speakers

Enhanced surround for headphones

HE AAC HE-AAC requires multiple streams to accomplish what Dolby Digital Plus delivers in a single stream*

*Source: 9 years HE AAC – technical challenges using an open standard in real-world applications AES 132nd Convention, Budapest, Hungary, 2012 April 26–29

Lower OPEX

A Single Stream for All Devices & Use Cases

Dialog Enhancer Dialog volume boosted

background noise subdued

Audio Regulator Prevents Audio Distortion

Volume Leveling

Surround Sound Virtualization Immersive surround sound over: Stereo

headphones and speakers

5.1 Pass-Through Connect to Home Theaters

Volume Optimizer Fine Tune Speakers playback

Surround Decoder

Device Playback and Decoder Support

CALM Act

Loudness Measurement and Correction

Video Accessibility Act 2010

Audio Description (AD)Soundtrack production broadcast for the enjoyment of deaf-blind individuals

Narration service that describes the visual content of each scene

Mixed with the main audio

Support for Regulatory Considerations

Loudness Management

• Content distributor has control over audio level & dynamic range compression

• Dolby decoders feature various output modes to address all listening scenarios, from home theater to TV to mobile playback

USER SET-UP

DATA STREAM

METADATA

AUDIO DATA

REGULATION COMPLIANCE

DOLBY ENCODER

DOLBY DECODER

AUDIO DATA

Enhancing Accessibility Services with Immersive Surround Sound

Enables superior audio experience for all consumers Provides surround descriptive audio for the visually impaired Delivers increased intelligibility of services for the hearing impaired Supported by Dolby multi-stream decoder solution with advanced

secondary audio stream mixing

Encoder Transcoder

Approval Program ENCODER DECODER

ONE decoder Implementation Tested by Dolby for all devices

1

X

MULTIPLE decoder Implementations No guarantee it works

Poor QoE/QoS

No testing framework ENCODER DECODER

HE-AAC

HE-AAC

END-TO-END SOLUTION

End To End Ecosystem – The guarantee it Works?

>1.3B DEVICES

ENCODING

CHIPSETS

Dolby Digital Plus Online Ecosystem

DELIVERY FRAMEWORK AND DRM

HLS Smooth Streaming

CONFIDENTIAL. Copyright 2013. Dolby Laboratories, Inc. 28