Business Breakdowns
Episode 107 Dolby: The Sound Standard
Business Breakdowns

Episode 107: Dolby: The Sound Standard

Business Breakdowns

Episode 107

Dolby: The Sound Standard

Paul Vincent and William Nott are portfolio managers at Ninety One. We cover how Dolby's audio encoding technology became the industry standard, who its ultimate consumers are, and how its push into video presents new opportunities for growth.

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(00:02:50) - (First question) - The problem that Dolby originally set out to solve

(00:05:02) - Some of the well known products Dolby offers today 

(00:08:41) - The path from noise reduction to enhancing the listener experience 

(00:13:23) -
Invisalign: Patents, Patients, Profits
; How their codec technology is actually implemented 

(00:16:40) - Whether or not how we record and what we record on can inhibit our ability to use Dolby’s products

(00:18:32) - What the end markets for Dolby look like today  

(00:21:04) - Whether or not they can offset against the consolidation of consumer technology 

(00:22:54) - Targeting manufacturers as customers

(00:26:55) - The trouble in defining Dolby’s total addressable market 

(00:28:15) - Metrics used for measuring the size and relevance of the business 

(00:31:23) - Outlining their royalty pricing model, it’s evolution, and the model’s dynamics  

(00:34:54) - Whether or not the decline of movie theaters will impact their growth 

(00:38:01) - Thoughts about Dolby’s cyclicality and potential trend impacts  

(00:42:38) - The margin profile and how capital intensive the business is 

(00:46:03) - His views on the potential risks to Dolby’s future 

(00:50:30) - What stops Amazon or Apple from producing Dolby adjacent products in house

(00:53:18) - How risky it is for Dolby to start pushing into the visual side of entertainment 

(01:00:53) - Lessons for investors and builders when studying Dolby’s story 

Dolby: The Sound Standard

Introduction

Matt
This is Matt Reustle, and today, we are breaking down Dolby Labs. Now, this is a great niche of Business Breakdowns, businesses that are widely known, but barely understood. And when I first heard about breaking down Dolby, I thought to myself, well, here is a fascinating business. I see them everywhere. But with Apple making speakers, Google making speakers, Sonos making speakers, where does Dolby actually fit in? Do they need to exist?

I knew Dolby was everywhere, at the movies, in my car, but I didn't realize Dolby is everywhere. It's in my iPhone, my Mac, my TV. So to break down Dolby, I was joined by Paul Vincent and William Nott from asset manager Ninety One. We cover the back story of Ray Dolby, someone who might warrant some more coverage. We cover what Dolby is actually building and selling, whether that's the technology, hardware, software, et cetera, and we cover how the business model actually works. So this is a fascinating story, and please enjoy this breakdown of Dolby.

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