Behind the scenes: Dolby’s acquisition of Coding Technologies

Submitted by BDTI on Wed, 12/19/2007 - 21:00

Dolby, based in San Francisco, CA, has acquired audio compression specialist Coding Technologies. Dolby is well-known for its AC-3 audio compression algorithm (also known as Dolby Digital), used worldwide in cinema sound and more recently accepted for audio for digital television in North America.  Coding Technologies focuses on audio compression for mobile, digital broadcasting and Internet markets worldwide.  Coding Technologies has developed Spectral Band Replication and other technologies that allow significant reduction in bit rate without a huge perceived loss in quality.  Founded in 1997 as a Swedish startup, Coding Technologies later expanded into a joint Swedish/German effort with an office in Nuernberg which was seeded by former employees from Fraunhofer (one of the developers of MP3 audio compression).   

Spectral Band Replication is an adjunct to, and can operate with, any audio compression algorithm.  SBR operates first at the encoder stage by analyzing the original waveform (shown in the lower right-hand corner of the figure) compared with the initial output of the underlying encoder (such as AAC or MP3), shown in the upper left of the figure.  Clearly the initial encoder output has been low-pass filtered.  From the difference between the original and the encoded audio, control information is derived and then embedded in the encoded bistream.  A decoder with SBR capabilities combines the control information with the restored decoded audio signal, shown again in the upper left of the figure.  To augment the low-pass filtered signal, part of the signal recreated by the decoder can be replicated at a suitable higher frequency, as shown in the lower left hand portion of the figure.  Further processing in the decoder, for example applying an amplitude envelope, yields the spectrum in the upper right corner of the figure, which is much closer to the original. A decoder with no SBR capabilities simply ignores the extra SBR information in the bistream.  Thus SBR-enhanced bitstreams are backward compatible with existing decoders.


Figure 1. Four stages in Spectral Band Replication (SBR). Reproduced with permission from M. Dietz et al, “Spectral Band Replication, a novel approach in audio coding,” Preprint 5553, AES Convention, May 2002.  Available from

SBR has been applied to MP3, resulting in mp3PRO, which is available in consumer products such as some models of RCA Lyra and Philips Boomboxes, and the software sound editor Adobe Audition (formerly Cool Edit).  SBR has also been applied to AAC (widely known as the compression technology in the iPod) to form aacPlus (or HE-AAC, “high-efficiency AAC”), now used by XM radio and standardized by the MPEG-4 standards body. 

Coding Technologies has also developed a technology for compression of multi-channel sound called MPEG Surround.  The idea is to mix down multi-channel audio into a stereo bitstream, which can be decoded by a legacy decoder.  Thus, many channels are carried in the space normally used for two.  As with SBR, the encoder provides a small amount of extra control data to allow reconstruction.  A decoder enabled for MPEG Surround can reconstruct surround sound from the stereo bit stream and accompanying control data.  This writer heard some of the first demonstrations of this technolgoy at the May 2006 Audio Engineering Society convention and came away impressed.  MPEG-Surround is also being standardized by MPEG.  Surround sound is a hot topic for broadcast applications, and is expected to make major inroads in consumer devices. 

Dolby has had a long-standing, though arm’s-length, relationship with Coding Technologies. For example, Dolby contributed heavily to the research leading to AAC, upon which HE-AAC is based.   And Dolby’s wholly-owned subsidiary Via Licensing has handled licensing of HE-AAC for Coding Technologies for many years.

What motivated Dolby to acquire Coding Technologies?  There are probably several reasons, but the most likely relate to Coding Technologies’ complementary technology portfolio, which may enable Dolby to enter new markets.  Dolby has for decades had a business model of licensing technology for consumer applications, and certainly Dolby has a strong position in DVDs and digital television.  But Coding Technologies’ lower bit rates open up more of the consumer market—lower bit rates can translate into smaller memory for a device, lower bandwidth, and/or longer playing times. In the broadcast arena, as mentioned, XM Radio uses SBR, and outside of the United States, Digital Radio Mondiale (DRM) uses SBR.  Digital Audio Broadcast (DAB) is also incorporating SBR technology.  Dolby Digital is an inherently multi-channel technology, but MPEG Surround offers quite good quality at surprisingly low bit rates, opening wider possibilities for surround sound in consumer devices.  Meanwhile Coding Technologies, which has already shown considerable success in licensing its technology, stands to gain by having a much larger organization behind it to disseminate its technology.  And Coding Technologies can draw on Dolby’s extensive and well-oiled certification group.

Dolby recently became a publicly held company and now has cash for acquisitions.   Dolby has been deploying this cash to acquire companies like Coding Technologies and to bootstrap itself into new markets,   For example, Dolby also recently acquired  Brightside Technologies which developed a high-brightness technology for displays called HDR.   Dolby has  announced that SIM2, a manufacturer of home theatre systems, will produce flat-screen HDR LCDs.  Thus, at the same time that Dolby is expanding its reach into consumer and broadcast audio, it is also expanding out of audio, but into markets (home theatre) where it already has know-how and a presence.

What are the implications for the world of digital signal processing technology?  Dolby has an excellent track record of working closely with developers of DSP solutions (such as programmable DSPs and SoCs) to certify implementations of Dolby’s technology.  Dolby has helped boost the fortunes of some DSP vendors.  For example, Zoran fielded a programmable DSP chip implementing six-channel Dolby Digital surround-sound audio for home and movie theater applications.  Although suitable for digital signal processing in general, the Zoran chip was tuned for the Dolby algorithm, and Zoran gained significant sales by partnering with Dolby.  In the past two decades or so, most developers of DSP hardware and software for multimedia products have have been faced with implementing or integrating Dolby algorithms.  With the acquisition of Coding Technologies, Dolby’s presence in the DSP world is likely to remain as strong as strong as ever—and will probably increase with the expanded application of Dolby’s and Coding Technologies’ work into the consumer market.

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