Digital Cinema Encoder was developed in conjunction with Dr. Michael Marcellin, a leading expert in JPEG2000 image coding technologies and a key advisor in developing the DCI (Digital Cinema Initiatives, LLC) standards for D-Cinema, and signals the entry of DTS as a key provider of premium technology and product solutions supporting the motion picture industry's transition to Digital Cinema.

Digital Cinema Encoder helps to achieve any desired bit rate or distribution file size, while maintaining constant image quality compliant with DCI standards. Encodes are optimized through the use of a DTS-VBR implementation of JPEG2000, which makes the most efficient use of the available bit budget, and produces the highest quality images for D-Cinema exhibition. Complex or difficult frames are encoded with a higher bit rate, and easy frames are encoded at a lower bit rate to maintain quality, optimizing the image quality of the entire motion picture or individual reels.

By comparison, competing systems employ Constant Bit Rate encoding (CBR), simply assigning a fixed maximum bit rate for each frame, often with mixed results, particularly in frames containing complex moving images. As D-Cinema exhibition expands, duplication time and distribution costs will become an important factor in its commercial success.