Partly marketing and licensing deals with studios - they do market very heavily. But they did pretty much invent the whole surround sound thing as we know it today, as well as a host of other realtime audio processing technologies. They're kinda the luxury mattress company of theatrical audio - it's expensive, but once you get it installed it's really nice to have.
When I did audio production in the film industry, Dolby stuff was a post production expense but not e very big one. Their license fees aren't staggeringly expensive, and the quality and reliability of the playback system was its own argument - if the Dolby 5.1 sounds right in one theater it's going to sound right in another, and that's a big deal because bad sound can really kill a movie, even if the audience can't articulate why (most people don't think too much about sound).
Digidesign (the manufacturers of Pro Tools & later owners of Avid) are a far more aggressive company that has maintained a virtual lock on its market with a combination of very expensive hardware and moat-building strategies.
When I did audio production in the film industry, Dolby stuff was a post production expense but not e very big one. Their license fees aren't staggeringly expensive, and the quality and reliability of the playback system was its own argument - if the Dolby 5.1 sounds right in one theater it's going to sound right in another, and that's a big deal because bad sound can really kill a movie, even if the audience can't articulate why (most people don't think too much about sound).
Digidesign (the manufacturers of Pro Tools & later owners of Avid) are a far more aggressive company that has maintained a virtual lock on its market with a combination of very expensive hardware and moat-building strategies.