Dolby Laboratories, best known for its movie theater surround-sound systems, on Monday said it has teamed up with German virtual reality company Infitec GmbH to develop a three-dimensional theater projection system for theaters.

Dolby will integrate Infitec's 3-D technology, designed by Daimler Chrysler for automotive design, with the digital cinema playback system it developed for movie theaters converting to digital projection systems from 35-millimeter film projectors.

Digital 3-D systems are one tool Hollywood is using to staunch competition from DVDs, the Internet and video games to bring consumers back to theaters.

Last week's 3-D debut of Columbia Pictures' animated movie Monster House raked in more than twice the average per-screen box office of the 2-D version, showing that 3-D systems can boost a movie's appeal.

Dolby says its Infitec-based system would be cheaper and more flexible than that of the leading 3-D cinema company, Real D, because it allows a 3-D image to be projected directly onto standard white screens.

Real D's system requires silver screens to boost light on the image. Real D has installed more than 200 screens worldwide and has led the two largest digital 3-D film debuts ever - the Walt Disney Co's Chicken Little and Monster House.

Existing 3-D systems that use white screens also require theater-goers to wear expensive, battery-charged glasses to view the 3-D images. Dolby said its solution allows theater patrons to use the inexpensive polarized plastic glasses used by Real D systems.

Tim Partridge, senior vice president and general manager of Dolby's professional division, said the company got serious about designing its own 3-D system during the debut of Chicken Little.

Dolby worked with Disney and Real D to convert 100 theaters worldwide to digital 3-D systems for the film's run last fall.

During that roll out we were able to see what an impact 3-D had on the experience, Partridge said. We learned about the drawbacks. We stood back and tried to figure out what it would take to have an optimized 3-D system.

Dolby has deployed its digital playback system on 160 theater screens worldwide. The company expects its 3-D technology to be available by spring of 2007.