Digital firm changes how we hear movies.

WESTLAKE VILLAGE - It took a bunch of prehistoric monsters to bring motion picture sound technology into the 21st century.

Anyone who has been to a movie in the past year or so is probably familiar with Westlake Village-based Digital Theater Systems, better known as DTS.

In theaters equipped with its system, a logo appears before every film in which the words "The ... Digital ... Experience" slam onto a big compact disc with a metallic clang, then the entire thing disintegrates in a glassy explosion.

Less well-known is the company's history, and how it became a leader in cinema sound after less than three years in operation.

The genesis of DTS was an idea in the mind of Terry Beard, an electronic engineer and inventor who heads a camera equipment manufacturing company called Nuoptix Inc. Beard believed that digital sound could more effectively be stored on compact discs than film stock; the only tricky part was coming up with a system that kept a film's soundtrack on CD in perfect synchronization with what was happening on the screen. So he set out to invent one.

In 1991, he demonstrated his system to filmmaker Steven Spielberg by taking one of the director's old movies, "Close Encounters of the Third Kind," and converting it to CD-based digital sound. Spielberg was impressed.

Change comes gradually

But Hollywood decision-makers, even those as powerful as Spielberg, don't change their systems overnight when a new technology comes along. Beard moved on to other projects, and the idea was seemingly shelved.

But the following August, Spielberg approached Beard with the news that he was ready to wrap a film titled "Jurassic Park." The director wanted to use Beard's experimental sound system.

A six-month sales job followed, with Beard working to convince executives at Universal City-based Universal Pictures, the film's backers, that his method would work. Finally, in January 1993, they gave the green light, and DTS was born.

The most astonishing thing about DTS is the speed with which it was launched. On Jan. 27, 1993, a three-way limited partnership was formed in which ownership of the company was split among Spielberg, Universal and Beard with a group of other investors.

That left only four and a half months to create a company to manufacture the DTS system, sell it to theater owners around the country, and install it in their cinemas before the June 11, 1993 opening of "Jurassic Park."

Pulling ahead

By the time the film opened, DTS was operating on 847 screens in the U.S. Today, DTS operates on 6,017 screens worldwide and 3,425 in the U.S., according to company Vice President and General Manager Bill Neighbors.

Those totals easily surpass those of its two competitors in the digital theatrical sound arena, Sony Corp. subsidiary Sony Dynamic Digital Systems (2,414 screens worldwide, 1,956 in the U.S.) and Dolby Laboratories Inc. (4,028 worldwide, 1,394 in the U.S.)

"We do everything fast at this company," Neighbors says, pointing out a screening room under construction at the company's industrial park headquarters in Westlake Village that didn't exist the week before.

DTS now has 46 employees and offices in several European and U.S. cities. Its revenues were approximately $12.5 million in 1995, an increase of 15 to 20 percent over 1994, Neighbors said. He's projecting a similar increase in 1996.

DTS's system and strategy are fundamentally different from SDDS and Dolby. Those competitors print digital information directly on the film, using special readers in the projector to translate the series of dots. DTS prints a time code on the film that controls a compact disc player, a system that allows for a special amount of flexibility, Neighbors said.

For example, dubbing a film into foreign languages is made easier with DTS because only the CD soundtrack need be changed, rather than the entire film, Neighbors said. The system can also accommodate an extra CD-ROM drive capable of playing voice descriptions of a film's action for the visually impaired; these descriptions are transmitted to viewers through wireless headphones.

Offbeat pricing

Its pricing strategy is also somewhat unusual. DTS systems sell to theater owners for a list price of $5,950. Meanwhile, it charges a licensing fee to filmmakers who use DTS sound of $33,700 per motion picture. Thus, much of DTS's earnings come from film studios, and it relies on its high penetration in theaters to convince filmmakers to use the system.

Culver City-based SDDS, meanwhile, charges a licensing fee of only $7,500 per film, but its system costs theater owners $11,100 - a similar pricing system to Dolby's.

The result is that DTS's studio customers are mainly creators of big-bridget films like "True Lies" and "Braveheart," although the system has been used in a large number of smaller comedies and dramas as well.

The next step for DTS might be its most ambitious yet. The company is designing a home theater system for consumers using its surround-sound, digital technology.

"We can't go in there," Neighbors says, pointing to a closed door behind which DTS researchers are toiling away at the new systems. They don't exist yet, but development is proceeding at the speed of sound.

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Digital Theater Systems

Year founded: 1993 No. of employees then: 10 No. of employees now: 46 Revenues then: $5 million Revenues now: $12.5 million