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Dolby's Glasses-Free 3-D: Will It Matter?

Thursday - 4/11/2013, 3:21am  ET

Do you remember much from the 2010 Consumer Electronics Show?

Yeah, me neither. The one thing I do remember, however, is that 3-D television was heralded as the next big thing.

Of course, we all know how that turned out: Despite the best efforts of such retailers as Best Buy to stir demand for the latest and greatest 3-D sets from the likes of Sony and Panasonic , the technology fell flat as consumers were largely resistant to wearing the expensive glasses required to make it work.

Even then, after Toshiba introduced one of the first glasses-free 3-D TVs to the market, the product was still prohibitively expensive and, simply put, not compelling enough to convince the masses it was worth their money.

Even so, wildly popular 3-D movies like Avatar proved audiences are more than willing to watch good 3-D content if the venue is right. From an investors' standpoint, then, many of us couldn't help but wonder what it would take for 3-D viewing to actually succeed on a wider scale in our homes.

Enter Dolby 3D
That's why I'm so intrigued by Monday's news that Dolby and Philips have collaborated in a joint project to create a new content delivery specification for the Dolby 3D format, which will be part of a "suite of technologies" to more easily allow content creators the ability to make, deliver, and play back glasses-free 3-D content.

To help pitch the use of Dolby 3D, Dolby and Philips enlisted content creation specialist The Foundry, who will integrate the format into its widely used postproduction software products NUKE and OCULA. Incidentally, those products are the same ones behind Avatar's ridiculously cool 3-D effects, so it's telling that The Foundry is willing to open the door to Dolby 3D in its own solution.

In addition, Dolby management claims the new Dolby 3D format is "a crucial milestone in clearing the hurdles to easy and customizable 3-D viewing on TVs, tablets, smartphones, and laptops." With that in mind, while the tech isn't quite there yet, it's reassuring that Dolby and Philips seem to have the right idea. So, if glasses-free 3-D viewing does eventually find a place in consumers' homes, Dolby 3D's head start will go a long way toward ensuring it will play a big part.

Another dimension for Dolby
While this can't be bad for Philips, I'm sure I can't be alone in appreciating this as yet another way Dolby is working to diversify its operations away from its former core business in the relatively stagnant audio format market for PCs and other consumer electronics.

Couple that with the fact that Dolby is currently trading at just 14.6 times trailing earnings, boasts a decent return on capital of 18.3%, and had $743 million in cash reserves with no debt at the end of its most recent quarter, the stock is starting to look like too good a deal to pass up.

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This article was originally published as Dolby's Glasses-Free 3-D: Will It Matter?on Fool.com

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