Listen up Dolby Laboratories (NYSE:DLB) investors, because your favorite audiophile is officially no longer just that. Now, Dolby is well on its way toward improving your home theater picture, too.
On Monday, January 5, 2014, Dolby announced a new collaboration with Time Warner's (NYSE:TWX.DL) Warner Bros. Home Entertainment to advance its Dolby Vision imaging technology. To start, Dolby says, the first slate of Warner Bros. 4K titles "mastered" in the Dolby Vision format will include Edge of Tomorrow, Into the Storm, and The Lego Movie, each of which are scheduled for release in early 2015.
In retrospect, that shouldn't be entirely surprising. When Dolby announced its most recent quarterly results back in October, management also told investors to expect an early 2015 shipping time frame for the first TVs to include Dolby Vision. This is a perfect opportunity, then, for both Dolby and Warner Bros. to immediately showcase what those TVs can do.
Specifically, rather than focusing on ever-higher resolution, Dolby Vision is billed as a complementary technology to Ultra-HD and HD video signals, and aims to improve the images displayed on your TV to more closely simulate how our eyes see them. If you're still having trouble envisioning what that means, take a look at this video from Dolby on the topic:
But Dolby's new deal doesn't end with those first three films.
"The future of imaging and television is full of amazing possibilities," stated Warner Bros. Home Entertainment President Jim Wuthrich, "and we're eager to expand our partnership with Dolby to deliver a steady pipeline of Dolby Vision titles [...]."
According to the press release, that pipeline of additional catalog and new release titles will continue to flow throughout 2015. Wuthrich also went on to heap praise on the format, saying Dolby Vision enables them to provide home audiences a "dramatically enhanced picture quality that fully engages their senses and brings Warner Bros. movies to life in their living room."
What's more, in addition to TV manufacturers who've already signed on, Dolby says Dolby Vision is simultaneously receiving critical support from the likes of "A-list" directors, major studio executives, and service providers.
So why is this such a big deal?
First, Dolby Vision showed obvious promise when it was unveiled almost exactly one year ago, as ecosystem partners were expected to include Microsoft Xbox Video, Amazon Instant Video, Netflix, and VUDU. From an investors' standpoint, however, it still felt as though widespread adoption for Dolby Vision was painfully far out of reach. Meanwhile, Dolby was continuing to battle sluggish growth from its audio-centric core licensing business amid both waning DVD and Blu-ray player sales, and challenges maintaining growth in its crucial mobile segment.
But most unsettling to date was the fact that -- at least apart from buzz surrounding last year's CES and those brief updates from management on TV manufacturers -- there really hadn't been any significant updates regarding Dolby Vision's progress until now. I would argue, then, that Dolby Vision's agreement with Warner Bros. Home Entertainment easily represents the strongest piece of validation for the technology so far. After all, it would be tough to convince the media consuming public to wholeheartedly embrace an entirely new image format if no actual content is made to support it.
That said, whether Dolby Vision can win over the hearts of consumers with its first slate of Warner Bros. films will represent yet another key test for its long-term viability. But if Dolby Vision is truly as good as everyone says it is, today's announcement should portend good things for Dolby and its investors going forward.
Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Dolby Laboratories, and Netflix. The Motley Fool owns shares of Amazon.com, Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.