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Home Theater Market Grows

Consumers Becoming Sound-Savvy, Choosing Audio Options

AGOURA HILLS, Calif. – DTS, Inc. (NASDAQ:DTSI) has announced the results of a DTS-commissioned study conducted in conjunction with Nielsen Entertainment Research, showing growth in the home theater and surround sound marketplaces. Revealing the importance of surround sound to the DVD market, the study shows the impact on DVD purchases as well as current and projected penetration of home theater systems.

“DTS has long recognized the growth potential of the home theater and surround markets and will continue to help build this segment by educating consumers about surround sound and DTS,” said Jon Kirchner, President and CEO of DTS. “Today, even as low resolution music formats have become popular among people on-the-go, millions of consumers are discovering the immersive entertainment experience offered by true surround sound and are purchasing high resolution home theater systems. This is exciting news for our industry.”

STUDY RESULTS

Supporting the conclusions of the Nielsen Entertainment study, separate published reports by the Consumer Electronics Association estimate that by the end of 2004, 33% of U.S. households owned a home theater system, up from 21% at the end of 1999. Adding to the ownership levels, in an online survey of 2000 adults ages 18 to 65 across the U.S., Nielsen Entertainment determined that a full 75% of current home theater households have true 5.1-channel or greater surround sound installed, indicating the importance of sound to the home entertainment experience.

These figures are reinforced by marked increases in sales of DVD-based software over the past several years, coupled with the significant price decrease on systems from a multitude of consumer electronics manufacturers.

The Nielsen Entertainment study also revealed a distinct upward trend in the role that sound plays in enhancing the entertainment experience. A full 73% of home theater owners and 76% of surround sound owners indicate that upgraded surround sound is the most important special feature on DVDs. The study showed that surround sound owners are proactively selecting the sound format at the beginning of a movie, with 82% citing that they “always” or “sometimes” choose an audio format at the beginning of a movie (up 27% compared to the previous year.)

Surround sound owners are avid DVD purchasers and play a significant role in the consumption of DVD movies. According to the Nielsen Entertainment study, owners of home theater systems featuring surround sound purchase over 20% more DVDs than non-home theater owners. Additionally, home theater owners with surround sound systems own 45% more DVDs that non-home theater owners. Nearly 60% of home theater owners and 63% of surround sound owners are aware of DTS, and DTS-aware consumers own a significantly higher proportion of DVDs versus those consumers not DTS-aware. The study also found that consumers aware of DTS strongly agree that the DTS brand reflects superior audio technology and quality.

The study concluded that surround owners represent a broad segment of the DVD population: The majority of surround sound consumers range in age from 25 to 54 years old with annual household incomes ranging anywhere from $25,000 to $150,000.

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 processors, and there are more than 300 million 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 24,000 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 www.dts.com.

DTS is a registered trademark of DTS, Inc.

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