Audio Video News

A deal signed in late September by Dolby Laboratories and the China Audio Industry Association (CAIA) will result in standard worldwide licensing rates for DVD products manufactured by Chinese consumer electronics companies.

The deal supercedes one that expired September 30, 2002. Effective October 1, royalty rates will be the same for both exported DVD products and domestically manufactured DVD products sold in China. Previously, Dolby had negotiated discounted royalty rates for DVD players made and sold within China but it was deemed impractical to continue that arrangement for the future.

For the past three years Dolby offered a separate licensing agreement in conjunction with the CAIA for domestic DVD sales to help establish this market. The pioneering agreement with CAIA allowed Chinese manufacturers to make serious inroads in the worldwide DVD market in a few short years. Chinese CE manufacturers accounted for 37% of global DVD production in the first quarter of 2002. Of the current top 20 CE companies in DVD sales worldwide, nine are Chinese licensees.

Dolby's efforts will have the long-term effect of significantly reducing the number of counterfeit products that often confuse consumers, company officials believe. Dolby Digital is part of the worldwide standard for DVD; every DVD player sold must contain at least a two-channel Dolby Digital decoder. To date, over 77 million DVD-Video playback units with Dolby Digital have been sold; and over 118 million DVD-ROMs for PCs with Dolby Digital have been sold.

Audio technology is one of the least expensive ingredients of DVD technology, with a typical royalty rate of under US$1 per player, according to Dolby Labs.