Google is gunning for Dolby Atmos and Dolby Vision: The company is looking to introduce two new media formats to offer HDR video and 3D audio under a new consumer-recognizable brand without the licensing fees hardware manufacturers currently have to pay Dolby.
Google shared plans for the media formats, which are internally known as Project Caviar, at a closed-door event with hardware manufacturers earlier this year. In a video of the presentation that was leaked to Protocol, group product manager Roshan Baliga describes the goal of the project as building “a healthier, broader ecosystem” for premium media experiences.
Google didn’t respond to a request for comment.
The company’s primary focus for Project Caviar is YouTube, which does not currently support Dolby Atmos or Dolby Vision. However, Google also aims to bring other industry players on board, including device manufacturers and service providers. This makes Project Caviar one of Google’s most ambitious pushes for open media formats since the company began working on royalty-free video codecs over a decade ago.
Dolby’s fees can add up for manufacturers
Google’s open media efforts have until now primarily focused on the development of codecs. The company acquired video codec maker On2 in 2009 to open source some of its technology; it has also played a significant role in the foundation of the Alliance for Open Media, an industry consortium that is overseeing the royalty-free AV1 video codec.
Project Caviar is different from those efforts in that it is not another codec. Instead, the project focuses on 3D audio and HDR video formats that make use of existing codecs but allow for more rich and immersive media playback experiences, much like Dolby Atmos and Dolby Vision do.
Baliga didn’t mention Dolby by name during his presentation, but he still made it abundantly clear that the company was looking to establish alternatives to the Atmos and Vision formats. “We realized that there are premium media experiences where there aren’t any great royalty-free solutions,” he said, adding that the licensing costs for premium HDR video and 3D audio “can hurt manufacturers and consumers.”
Dolby makes most of its money through licensing fees from hardware manufacturers. The company charges TV manufacturers $2 to $3 to license Dolby Vision, according to its Cloud Media Solutions SVP Giles Baker. Dolby hasn’t publicly disclosed licensing fees for Atmos; it charges consumers who want to add immersive audio to their Xbox consoles $15 per license, but the fee hardware manufacturers have to pay is said to be significantly lower.
“We realized that there are premium media experiences where there aren’t any great royalty-free solutions.”
Still, in an industry that long has struggled with razor-thin margins, every extra dollar matters. That’s especially true because Dolby already charges virtually all device makers a licensing fee for its legacy audio codecs. A manufacturer of streaming boxes that wholesale for $50 has to pay around $2 per unit for Dolby Vision and Dolby Digital, according to a document an industry insider shared with Protocol.
“For lower-cost living room devices, the cost may be prohibitive,” Baliga said during his presentation.
HDR10+ didn’t become a household name
Google isn’t the first company that is trying to establish an alternative to Dolby’s formats. Samsung in particular has long resisted paying Dolby more money than necessary. The TV maker co-developed HDR10+ as a royalty-free alternative to Dolby Vision, and isn’t supporting Dolby Vision on any of its TV sets.
However, attempts to make HDR10+ a household name have largely failed. That’s in part because of Dolby’s strong existing brand, as well as its licensing strategy: Instead of charging streaming services for the use of Dolby Vision, the company has been using these distributors as evangelists for the format, allowing them to market it as a premium feature. Dolby Vision has gained support from many services, including Netflix, Disney+ and HBO Max.
Dolby CFO Robert Park called this arrangement a key factor for the success of Dolby Vision during a recent fireside chat. “Having the distribution partners wanting to distribute our technology was brilliant,” Park said. “If we tried to monetize everything in this ecosystem, you would probably see a fraction of the brands you see today. Where we make money is on the playback, and we get our fair share.”
The company is set to repeat that success story in the audio space, where services like Apple Music are betting on Dolby Atmos to become the de facto standard for spatial audio.
Some companies are trying to establish an alternative under the umbrella of the Alliance for Open Media, whose members include Amazon, Google, Netflix, Meta and Samsung, among others. The group is currently developing a new audio format called Immersive Audio Container that is meant to deliver 3D experiences using a variety of open codecs.
However, it’s unlikely that the Immersive Audio Container project would be able to compete with the branding of Dolby Atmos on its own. That’s why Google is now looking to establish a new umbrella band for both HDR10+ and 3D immersive audio, which would be governed by an industry forum and made available for free to hardware manufacturers and service providers.
Google has a lot of influence on hardware manufacturers
In addition to making these new formats available for free, Google also wants to make them more attractive to device manufacturers and consumers alike by adding functionality beyond what Dolby Atmos and Vision offer. On the audio side, this includes greater flexibility around a larger variety of audio setups.
For video, Google wants to focus on capture, allowing consumers to record video in HDR10+ and then share it via YouTube and other services. “We want users to be able to capture in these premium formats and get better-quality video,” Baliga told device manufacturers during his presentation.
“If we tried to monetize everything in this ecosystem, you would probably see a fraction of the brands you see today."
Google is well-positioned to push the industry to adopt Project Caviar. Apple has thrown its support behind Dolby Vision, but the format has gained close to zero support from Android phone manufacturers, giving Google an opening to promote a royalty-free alternative with a big focus on video capture.
At the same time, Google has a lot of influence on the makers of smart TVs and streaming devices, thanks to YouTube being a must-have app. Google has previously used this influence to push companies like Roku to support the AV1 video codec, and could do so again to advance Project Caviar.
For Dolby, increased competition could have significant financial consequences. The company still makes most of its money with its legacy codecs, but Dolby Atmos and Dolby Vision have been the fastest-growing parts of its business. In its fiscal year 2021, Dolby generated 25% of its revenue with Atmos, Vision and its imaging patents, according to Park, who told the audience of the William Blair 42nd Annual Growth Stock Conference in June that he fully expects this line of business to become as big as Dolby’s legacy codec business over time.
