With Dolby behind it, SLS goes big on sound

A year into a quiet buyout by Dolby Laboratories Inc., SLS Audio in Ozark is pinpointing the cinema market.

The Dolby deal was inked five years after investor funding failures and retail efforts gone awry forced predecessor SLS International Inc. into Chapter 11 bankruptcy reorganization, and eventually Chapter 7, that resulted in the rebirth as SLS Audio. Since 2009, the company focused on developing new technology such as digital amplifiers. Now, SLS Audio operates as a research and development division of San Francisco-based Dolby’s Cinema Business Group.

Over a year into new ownership, both companies remain silent about how the deal – reported in audio-visual trade publications such as Port Washington, N.Y.-based Sound & Communications – came to fruition and what it involved.

“I do know Dolby was watching the company, recognized their value, made an offer and it’s been very positive from all accounts on both sides,” said Sound & Communications Editor David Silverman. “Dolby kept it very quiet.”

Although Dolby first consented to an interview with Springfield Business Journal, the company later declined to comment through spokesman Neil Torres. SLS Audio President John Gott also declined an interview.

“What we can share is that the deal supports Dolby’s efforts to accelerate the adoption of Dolby Atmos in cinema,” Torres said via email, noting the Ozark company would develop and sell products under the SLS brand through its own sales organization.

“The company has a distinguished record developing high-quality, innovative products for cinema and professional sound. We’re thrilled to be working together.”

Immersive sound
First introduced in 2012, Atmos is Dolby’s current “immersive sound” offering for movie theaters and in-home entertainment, intended to create 3-D audio through a combination of traditional surround sound augmented by additional subwoofers and overhead speakers.

“To know and understand it, I think you have to be in a theater,” Starplex Cinemas Marketing Director Traci Hoey said, noting Dolby regularly demonstrates the system at industry conventions. “It did feel like you were encompassed by all that sound.”

According to SLSAudio.com, the Ozark company’s contributions include using its ribbon-based loudspeaker technology to enhance equipment components, as well as its background in sound system installation and direct-focus speakers to help reduce installation costs for cinemas.

Steve Zimmerman, business development director for Iola, Kan.-based Sonic Equipment Co., which installs Dolby and SLS equipment in the United States and Canada, called the partnership a smart move for sales.

“They make a quality speaker that holds up with the demands of the system,” Zimmerman said of SLS, which still operates at 1650 W. Jackson St. “I think that’s going to push some people who were on the fence to probably do it.”

But cost concerns exist in the cinema market.

B&B Theatres Inc. was quoted $100,000-$150,000 per screen for the Atmos system. Brock Bagby, programming and business development director for the Liberty-based theater chain, said the company hasn’t invested in the costly new sound technology, but it’s not ruled it out. Installations for 7.1 surround sound systems run between $40,000 and $75,000 per screen, he said.

Bagby said that’s money B&B would rather put toward in-demand amenities, such as the leather reclining seats and food service available at its Marquee Suites in Ozark.

“The hardest thing for our company right now with Atmos is customers walk in and they feel the leather recliners and they see the massive screen, but we’ve yet to experience it in a setting where we notice the difference from 7.1,” Bagby said, noting every speaker in B&B’s Ozark cinema is an SLS product, and the companies have discussed installing Atmos in the large-format Grand Screen. “(Atmos) is cool, it’s loud, but if (a theater) has recliners that is what’s driving customers.”

Two similar auditoriums at B&B’s Wentzville theater that opened last month were built with the ability to add Atmos at a later date.

Industry changeover
Zimmerman said Atmos is arriving on the heels of an industry changeover from 35 mm film to digital projection and sound. Since most independent theaters that aren’t part of major chains only recently completed those conversions, owners have to be selective in spending renovation budgets.

“The price is a little bit prohibitive when you look at what it’s going to take to recoup these costs,” Zimmerman said. “Most exhibitors felt they see an immediate return on investment with the seats.”

Hoey said Dallas-based Starplex Cinemas doesn’t use Atmos in any of its theaters, but that could be changing. The company has agreed to a $172 million cash buyout by Leawood, Kan.-based AMC Theatres, which uses Dolby products among 346 cinemas nationwide.

In April, AMC and Dolby announced a partnership to outfit 50 cinemas with the Atmos sound system, as well as Dolby’s laser projection and AMC’s reclining, vibrating seats by the end of 2018. Another 50 are slated for the upgrades by 2025.

AMC spokesman Ryan Noonan said the company couldn’t comment on future plans for acquired locations – including Starplex’s Springfield 11 Theatre at 3200 E. Montclair St. – until the Federal Trade Commission and the U.S. Department of Justice approve the deal.

As Dolby pushes its immersive sound offering to movie houses and home theaters, Bagby and Zimmerman speculated SLS’ involvement to reduce costs might also scale down the overall size of the Atmos system so it can be applied to smaller-sized auditoriums.

“Dolby was working on that prior to the deal with SLS, but those two combining forces makes sense. It will probably help in the long run,” Zimmerman said. “They recognize what they have to do to gain market share, and they’re trying to make it affordable for as many as they can.”