DTS Mandatory Format for Blu-ray Disc and HD-DVD

Agoura Hills , CA - September 27, 2004 - DTS (Digital Theater Systems, Inc.) (NASDAQ: DTSI) today announced that its DTS Coherent Acoustics coding system has been selected as mandatory audio technology for both the Blu-ray Disc (BD) and High Definition Digital Versatile Disc (HD-DVD), the two next generation high-definition disc formats for home video. In addition to the Company's core technology, DTS' extension technologies have also been selected as options. Encompassing higher data rates, lossless operation and additional channels, DTS' extension technologies, identified by the DVD Forum (HD-DVD) and Blu-ray Disc Association collectively as DTS++, have been approved as optional features on both HD-DVD and Blu-ray Disc. DTS++ is also the only lossless audio technology selected for both disc formats.

"As a mandatory technology in the next generation standards, a DTS decoder will be built into every next generation player that incorporates either HD-DVD or Blu-ray Disc, therefore allowing content providers the freedom to choose the audio technology best suited for their needs," said Jon Kirchner, President and CEO of DTS. "We are both excited and pleased, and believe that this is a vote of confidence in DTS? technology and market leadership. Although we do not expect to see revenue until the next generation products become available, we believe the mandatory inclusion sets the stage for a very positive future."

"Over the past several years, we have seen a marked increase in DVD titles that include DTS soundtracks, and we expect this number to accelerate as DTS becomes an audio standard for next generation formats," said Patrick Watson, Senior Vice President, Strategy and Business Development at DTS. "The mandatory inclusion of DTS in both the HD-DVD and Blu- Ray standards demonstrates the industry?s support for value-added DTS audio technologies. At the same time, DTS remains committed to artists, consumers and the industry by continuing our tradition of developing new technologies that offer superior performance and backwards compatibility."

DTS Coherent Acoustics

DTS Coherent Acoustics, first introduced into the market in 1996, was designed to be both extensible and backward-compatible based on its core + extension structure. Subsequent extensions to the original 5.1-channel format were an additional discrete channel for 6.1-channel audio (DTS-ES), and a 96 kHz sampling rate for high-resolution audio (DTS 96/24.) DTS audio tracks using either of these enhancements can be played on any existing DTS decoder, making them compatible with more than 280 million DTS-licensed consumer electronics products today, with advanced decoders able to play the added data.

Now, with the extra space and bandwidth afforded by HD-DVD and Blu-ray Disc, content providers and consumers alike can appreciate DTS audio tracks encoded at data rates greater than 1.5 Mbit/s, all the way to fully lossless operation - meaning that the soundtrack is bit-for-bit identical to the master. Both the mandatory DTS core technology, as well as optional higher sampling rates such as DTS 96/24 and additional channels up to 7.1, enable both Blu-ray Disc and HD-DVD formats to offer DTS' premium audio quality to consumers while retaining compatibility with all existing DTS decoders. This is the only approved coding system offering this range of performance yet maintaining full backward compatibility, therefore allowing a single audio track to provide advanced features and to support the large population of existing multi-channel preamps and receivers.

HD-DVD and Blu-ray Discs are next generation packaged media formats with large storage capacity capable of high-definition video in addition to other advanced technologies for an enhanced consumer experience.

For more information on HD-DVD, please visit www.dvdforum.org .

For more information on Blu-ray Disc, please visit www.blu-raydisc.com .

About DTS

DTS (Digital Theater Systems, Inc.) (Nasdaq: DTSI) is a digital technology company dedicated to delivering the ultimate entertainment experience. DTS decoders are in virtually every major brand of 5.1-channel surround processors, and there are more than 280 million DTS-licensed consumer electronics products available worldwide. A pioneer in multi-channel audio, DTS technology is in home theatre, car audio, PC and game console products, as well as 5.1 Music Discs, DVD-Video, DVD-Audio and DVD-ROM software. Additionally, DTS is featured on more than 22,000 motion picture screens worldwide. Founded in 1993, DTS is headquartered in Agoura Hills , California and has offices in the United Kingdom , Japan and China . For further information, please visit www.dtsonline.com .

DTS, DTS-ES and DTS 96/24 are trademarks of Digital Theater Systems, Inc.