DTS Introduces the Advanced DTS Digital Cinema Encoder(TM); First to Employ JPEG 2000 'Constant Quality' Encoding for D-Cinema.

AGOURA HILLS, Calif. -- DTS, Inc. (NASDAQ: DTSI), the leading digital entertainment company, expanding its Cinema Division products portfolio, announces the DTS Digital Cinema Encoder(TM), the first commercially available encoder that provides "Constant Quality" encoding for D-Cinema presentation. The DTS Digital Cinema Encoder uniquely utilizes JPEG 2000 image compression with DTS Variable Bit Rate(TM) (DTS-VBR) encoding, to produce the highest quality images for D-Cinema, with file sizes between 30 and 50 percent smaller than competing systems.

The DTS Digital Cinema Encoder was developed in conjunction with Dr. Michael Marcellin, a leading expert in JPEG 2000 image coding technologies and a key advisor in developing the DCI (Digital Cinema Initiatives, LLC) standards for D-Cinema, and signals the entry of DTS as a key provider of premium technology and product solutions supporting the motion picture industry's transition to Digital Cinema.

The advantage of the DTS Digital Cinema Encoder lies in its ability to achieve any desired bit rate or distribution file size, while maintaining constant image quality compliant with DCI standards. Encodes are optimized through the use of a DTS-VBR implementation of JPEG 2000, which makes the most efficient use of the available bit budget, and produces the highest quality images for D-Cinema exhibition. Complex or difficult frames are encoded with a higher bit rate, and easy frames are encoded at a lower bit rate to maintain quality, optimizing the image quality of the entire motion picture or individual reels. By comparison, competing systems employ Constant Bit Rate encoding (CBR), simply assigning a fixed maximum bit rate for each frame, often with mixed results, particularly in frames containing complex moving images.

As D-Cinema exhibition expands, duplication time and distribution costs will become an important factor in its commercial success. According to Dr. Marcellin: "Recent tests of the DTS Digital Cinema Encoder were conducted to compare the encoding quality of a digital cinema print using CBR encoding and VBR encoding. Results using Peak Signal to Noise Ratio measurements confirmed that a digital film encoded at 150 Mbps using VBR encoding, produced the same quality as a digital film encoded at 250 Mbps using CBR encoding. Further tests also showed that the VBR could be reduced still further while maintaining the highest quality images. VBR encoding also exhibits excellent temporal rate control (motion sampling rate), with no image lag or flicker, which is essential for films that contain significant motion, such as fast action or sports. CBR encoding has virtually no temporal rate control for film frames with motion, resulting in possible image distortion."

The DTS Digital Cinema Encoder also provides efficient encoding of extra materials, such as replacement frames or watermarked frames. It supports the DCI requirement of 2k and 4k resolutions, and is scalable for higher or lower resolutions. The encoder is available in two configurations: The primary offering is a turn-key hardware solution, and DTS also offers custom software installation.

In recent demonstrations, the image quality produced by the new Digital Cinema Encoder was confirmed: "The DTS Digital Cinema Encoder was recently used to demonstrate Constant Quality Variable Bit Rate encoding to the Hollywood community with impressive results," said Don Bird, Senior Vice President, Cinema Division at DTS. "This is an exciting time in the film industry and DTS is proud to be creating tools that make D-Cinema production better and easier, ultimately enhancing the cinema experience."

About Dr. Michael W. Marcellin

Since 1988, Dr. Michael W. Marcellin has been with The University of Arizona, where he is Professor of Electrical and Computer Engineering, and Professor of Optical Sciences. His research interests include digital communication and data storage systems, data compression and signal processing. He has authored and co-authored more than 150 papers in these areas. Dr. Marcellin is co-author of the book "JPEG 2000: Image Compression Fundamentals, Standards and Practice," which serves as a graduate-level textbook on image compression fundamentals, and is the definitive reference on JPEG 2000.

About Digital Cinema Initiatives, LLC

Digital Cinema Initiatives (DCI) was established in 2002 by seven Hollywood studios with the purpose of establishing specifications for Digital Cinema that ensure a high-level of technical performance, reliability and quality control, and specifies requirements for the distribution of Digital Cinema. JPEG 2000 is an international standard supported by ISO 15444-1, published jointly with the International Telecommunications Union (ITU). JPEG 2000 is scalable in resolution, detail, temporal rate and file size, making it ideal for Digital Cinema because it intelligently allocates bits or data based on the complexity of each film frame. Additional information can be found at www.dcimovies.com.

About DTS Cinema Division

DTS, a leading digital sound company, is now a leading digital entertainment company, with emergent capabilities and resources to integrate and support a fully digital experience for high-quality cinema presentation.

DTS' expanded range of products and services are founded upon our proven expertise in the creation and delivery of digital media for cinema, and have been developed to meet the opportunities and challenges of the industry transition to a digital entertainment platform. Our content creation and delivery tools for D-Cinema and E-Cinema, and media network systems offer new standards of quality and ease of operation. These tools and systems are designed to define and support new opportunities for increased revenues and efficiencies for content providers and exhibitors.

Alongside the existing advantages of DTS' single print solution for cinema sound, we provide an extended portfolio of products and services that allow flexibility and easy implementation of the latest delivery, scheduling and presentation solutions for pre-show, advertising and alternative content.

DTS continues its relentless commitment to partnering with exhibitors in providing value-added products and support in the transition from film to a fully digital entertainment experience..

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 www.dts.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause DTS' results to differ materially from historical results or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates" and similar words. These statements may include, among others, plans, strategies and objectives of management for future operations; any statements regarding proposed new products, services or developments; any statements regarding future economic conditions or financial or operating performance; statements of belief and any statements of assumptions underlying any of the foregoing. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to, the rapidly changing and competitive nature of the digital audio, consumer electronics and entertainment markets, the company's inclusion in or exclusion from governmental and industry standards, customer acceptance of the company's technology, products, services and pricing, risks related to ownership and enforcement of intellectual property, the continued release and availability of entertainment content containing DTS audio soundtracks, changes in domestic and international market and political conditions, risks related to integrating acquisitions and other risks and uncertainties more fully described in DTS' public filings with the Securities and Exchange Commission, available at www.sec.gov. DTS assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made.