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DTS and Nielsen Examine the Sound/Value Relationship

Consumers Respond to the Importance of Surround Sound in Preparation for High Definition

DTS, Inc. (NASDAQ:DTSI) has announced the results of its 3rd annual DTS-commissioned study conducted in conjunction with Nielsen Entertainment Research, revealing continuing growth in the home theater and surround sound marketplaces. In an online survey of 2,000 adults ages 18 to 65 across the U.S., Nielsen Entertainment determined that home theater systems featuring surround sound will continue to experience solid growth and drive a majority of home audio industry sales. Supporting the conclusions of the Nielsen research study, separately published reports by the Consumer Electronics Association estimate that by the end of 2006 approximately 38% of households (42 million) will own a home theater — up from 21% (22 million) in January 2000.

“Once consumers experience home theater in a retail environment, they tend to purchase equipment for their home,” said Dennis Goldenson, Director of Research at DTS. “This study demonstrates the impact of home theater ownership on DVD purchases as well as current and projected penetration of home theater systems. Today, we are seeing solid awareness of DTS, especially amongst home theater owners. This awareness is partly driven by more titles released that featuring DTS soundtracks on standard DVD, as well as the emerging high definition ‘next generation formats. Surround sound is more pervasive than ever and consumers are seeking enhanced sound quality.

“Surround sound owners are not just young, single males or those with unlimited disposal income. When considering the demographic profile, there is a remarkable similarity between the DVD consumer and the surround sound consumer. Trends are similar across age, marital status, presence of children and income.”

High Definition Awareness High

Notable news from the latest study includes remarkably strong awareness about the high definition next generation optical disc formats among DVD consumers. According to the latest study, close to three-fourths (73%) of these DVD consumers are either aware of HD DVD or Blu-ray Disc respectively. Close to 30 million home theater households now possess a system with five or more speakers for true surround sound, and among those that plan to upgrade their equipment to high definition, an impressive 74% consider surround sound important when deciding what high definition equipment to purchase.

Another key indicator of home theater growth is the growth of high definition displays. By the end of 2005 there were 21.6 million households with HDTV sets in the U.S. (19% of total households) according to figures from the JupiterResearch. By the end of 2010, the number of HD-receiving households will reach close to 75 million, or 63% of total households in the U.S.

A significant number of consumers are familiar with the surround sound concept when purchasing audio equipment. According to a recently completed CEA Audio Purchasing Study, 73% of home audio owners considered the surround sound listening mode as the most important audio product specification when evaluating a product.

The Nielsen Entertainment study revealed that more than half (54%) of DVD owners and 79% of surround sound owners consider high quality sound as the most important special feature on a DVD. In fact, recent studies have indicated that consumers who own home theater system believe that sound quality is as important as video quality.

When it comes to surround sound, 60% of home theater and surround sound owners are aware of DTS. Among those aware of DTS, 66% know that DTS surround sound is available on many DVD movies (a 3% increase from last year’s study.) Surround sound owners also play a significant role in the consumption of DVD products, purchasing a full 30% more DVDs compared to the general DVD consumer population — a 10% increase over last year’s study results.

The study concluded that consumers perceive the DTS brand as delivering next generation compatibility and superior audio technology. The consumer research indicates that DTS surround sound will play a critical role in the high definition evolution across hardware and software.

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About DTS
DTS, Inc. (NASDAQ:DTSI) is a digital technology company dedicated to delivering the ultimate entertainment experience. DTS decoders are in virtually every major brand of 5.1-channel surround processor, and there are hundreds of millions of DTS-licensed consumer electronics products available worldwide. A pioneer in multi-channel audio, DTS technology is in home theatre, car audio, PC and game console products, as well as DVD-Video, Surround Music and DVD-ROM software. DTS audio products are featured on more than 27,000 motion picture screens worldwide. Additionally, DTS provides imaging technology and services for the motion picture industry; DTS Digital Images, formerly Lowry Digital Images, is a wholly-owned subsidiary of DTS and an industry leader in image restoration and enhancement. Founded in 1993, DTS is headquartered in Agoura Hills, California and has offices in the United Kingdom, France, Italy, Canada, Hong Kong, Japan and China. For further information, please visit http://www.dts.com.

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