SOUND COMPETITION\DTS keeps pace with digital giants.

Byline: Yardena Arar Daily News Staff Writer

DTS. SDDS. Dolby Digital.

The audience is indeed listening - in selected theaters - to the best quality movie sound ever. But for studios and exhibitors alike, the three-way race between competing digital sound systems is a major headache for which no relief is in sight.

The battle pits Westlake Village-based Digital Theatrical Sound against systems created by two household names - Dolby Digital and Sony Dynamic Digital Sound. But DTS is by no means a David taking on two Goliaths.

A three-year-old partnership whose principals include Steven Spielberg and MCA-Universal, DTS is racking up both theaters and film licensees at an impressive clip. Last year, the company had what DTS Vice President and General Manager Bill Neighbors described as a "modest profit" on sales of $12 million.

But Dolby and Sony also report substantial gains, and major exhibitors say they can't afford to ignore any of the three.

"As we build new locations, we are including all three," said Alan Stokes, vice president in charge of marketing for Metropolitan Theaters, which has installed digital sound systems in about 20 percent of its 130 California theaters. The split right now is about equal between Dolby, DTS and SDDS, "with slightly more DTS," Stokes said.

"The fact that there are three systems out there is illogical," said Howard Lichtman, spokesman for Toronto-based Cineplex Odeon.

Although MCA-Universal has a 42 percent stake in the 1,550-screen chain, and DTS is the predominant format, Lichtman said some of the "substantial" proportion of Cineplex Odeon theaters equipped for digital playback have SDDS and Dolby systems.

"We have and will continue to invest in anything that will produce a better experience for our patrons," Lichtman said. "The problem is, we don't know which system is going to win, and it doesn't make a lot of sense to throw money in system A that might be wasted if B wins out, when we can put it into other enhancements."

Created by a team headed by sound engineer and company president Terry Beard, DTS is delivered on CDs that are played on machines synchronized to the film, a departure from other systems in which the sound code is on the film itself.

Spielberg was so impressed by the DTS reproduction of his multilayered soundtrack for "Jurassic Park" that he negotiated himself a piece of the partnership, as did MCA-Universal, which launched the format with the hugely successful film.

"We shipped the first units in the first and second weeks of May 1993. On June 11, the day 'Jurassic Park' opened, we had 837 installed units," recalls Neighbors. "The day that movie opened, we leapfrogged over Dolby (in number of theaters) and never looked back."

As of mid-January, Neighbors reported an installed DTS base of 5,849 theaters worldwide, including about 3,400 in North America.

For exhibitors, DTS is the cheapest of the three major contenders. The hardware (not including the $20,000 to $30,000 cost of making an auditorium digital-ready) now typically goes for about $4,000, Neighbors said.

In contrast, theaters upgrading to Dolby Digital must spend $10,000 for a processor (new theaters, however, pay only $7,000 extra for a conventional Dolby processor that can also read Dolby Digital). SDDS processors list for $11,000 but to fully enjoy the benefits of the eight-track system, theater owners must pay extra to add two speakers to the usual six-speaker configuration.

Dolby Digital, which was introduced in 1992 with "Batman Returns," had a worldwide installed base of 3,299 as of late January, including 1,004 in the United States and Canada.

Sony's installed base as of last week was 1,806 units, including 1,502 in the United States. However Sony only began shipping units in quantity in mid-1994, spokeswoman Gemma Richardson pointed out. All three systems report purchase orders and/or shipments of hundreds of units that are not yet installed.

To the studios, DTS is a less attractive proposition financially. The licensing fee for a major feature is $40,000, compared to $10,000 for Dolby Digital and, as of 1996, under $9,000 for SDDS, which previously was available free of charge to filmmakers.

However Neighbors pointed out that limited-release films can license DTS for $100 a disc, and that distributors of major motion pictures can recoup some of the license fee through savings in foreign language markets. DTS CDs with foreign language soundtracks cost only $50 to $100 a set, compared to $1,200 to $1,500 per print with foreign-language soundtrack encoding.

Last year, 67 films were released using DTS technology, compared to 122 Dolby Digital titles and 66 using SDDS. Some films have been released in multiple formats and all were put out with a standard Dolby analog track for theaters without digital capability.

Critics and supporters of the various formats cite advantages and disadvantages for each. DTS critics argue that having sound on separate discs can be a problem if projectionists forget to pack the CDs with the film reels. They also cite the possibility of the CD player getting out of sync with the film.

However SDDS and Dolby Digital critics say that encoding soundtrack on film subjects it to the same wear and tear that the images themselves experience through repeated play. At least one projectionist who played a film with SDDS encoding on a standard analog Dolby system reported hearing a buzz that he attributed to the Dolby processor trying to read the SDDS encoding.

But from a consumer standpoint, theatrical sound professionals say all three digital technologies are excellent and, to the untrained ear, indistinguishable.

"From a technical point of view, they are all good," said Carl Peterson, director of technical services for Pacific Theaters, a California and Hawaii chain. About 35 percent of Pacific's 300 theaters have digital sound, and "it's basically a three-way split," Peterson said.

"It's a booking pattern situation," he added. "If you play mostly Sony films, you'll want SDDS. If you play Universal, you want DTS. And if you play Disney or Warner Bros., you'll probably go with Dolby."

Smaller chains are being less aggressive in converting to digital sound in hopes that some standard will emerge. West Los Angeles-based Laemmle's has only one screen equipped for sound, at its Town & Country theater in Encino.

"We're waiting to see which movies that we play come out in which system," said Laemmle's general manager John Baron, noting that most of the art-house films the chain books haven't yet incorporated digital sound. "We don't have that much use for it."

DTS, meanwhile, isn't resting on its theatrical sound laurels (which include an Academy of Motion Picture Arts and Sciences technical award to be presented later this year).

DTS Technology division's Coherent Acoustics technology allows playback of up to eight distinct soundtracks, producing lifelike sound for everything from home theaters and multimedia computers to TV and CDs.

The first Coherent Acoustics chips, manufactured by Motorola, will be shipped at the end of May, and a line of audiophile recordings in the format - including quadraphonic recordings made in the 1970s by Wings - is also in the works.

LOGO LEXICON

Here's a guide to the different icons found in newspaper movie ads.

Dolby Digital bug: The only one of Dolby's three sound systems with digitally encoded sound. Soundtrack is recorded between the sprocket holes.

Dolby Stereo bug: Until the advent of digital sound in the early 1990s, this was the high-end theatrical sound system, and the one most commonly in use at the 22,000 theaters in North America.

Dolby bug: This denotes use of the Dolby system for reducing background hissing on recorded sound.

DTS: Digital Theater Systems L.P.'s digital sound system. Sound track is on CDs, played on processors that are synchronized to the time code on the film.

SDDS: Sony Dynamic Digital Sound. Sony's digital sound system. Soundtrack is encoded on both edges of the film.

THX: Not a recording system, but a set of standards developed by George Lucas' Lucasfilm for optimizing acoustics in theaters, regardless of sound format. To be certified as a THX theater, an auditorium must meet the THX program's criteria for design, construction, insulation, equipment and other factors. THX, by the way, was drawn from the name of Lucas' first film, "THX-1138."

SOURCE: Daily News research

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Photo (1--Color) Bill Neighbors, vice president and general manager of Digital Theatrical Sound, says the Westlake Village-based firm made modest profits in 1995. David Sprague/Daily News (2) Bill Neighbors displays the DTS soundtrack for the film "Richard III." David Sprague/Daily News Box LOGO LEXICON (See text)