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                                                                    EXHIBIT 10.8

                          DIGITAL THEATER SYSTEMS, INC.
                        INCENTIVE STOCK OPTION AGREEMENT

         THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement"), is made as of
28th day of January, 1998 by and between Digital Theater Systems, Inc., a
Delaware corporation (the "Company"), and _________________ ("Optionee").

                                  R E C I T A L

         Pursuant to the 1997 Stock Option Plan (the "Plan") of the Company, the
Board of Directors of the Company or a committee to which administration of the
Plan is delegated by the Board of Directors (in either case, the
"Administrator") has authorized the granting to Optionee of an incentive stock
option to purchase the number of shares of Common Stock of the Company specified
in Paragraph 1 hereof, at the price specified therein, such option to be for the
term and upon the terms and conditions hereinafter stated.

                                A G R E E M E N T

         NOW, THEREFORE, in consideration of the promises and of the
undertakings of the parties hereto contained herein, it is hereby agreed:

         1.       Number of Shares; Option Price. Pursuant to said action of the
Administrator, the Company hereby grants to Optionee the option ("Option") to
purchase, upon and subject to the terms and conditions of the Plan, ____________
shares of Common Stock of the Company ("Shares") at the price of $2.019 per
share.

         2.       Term. This Option shall expire on the day before the tenth
anniversary (fifth anniversary if Optionee owns more than 10% of the voting
stock of the Company or an Affiliate of the Company on the date of this
Agreement) of the date hereof (the "Expiration Date") unless such Option shall
have been terminated prior to that date in accordance with the provisions of the
Plan or this Agreement. The term "Affiliate" and other capitalized terms used
and not otherwise defined herein shall have the meanings set forth in the Plan.

         3.       Shares Subject to Exercise. Shares subject to exercise shall
be 25% of such Shares on and after the first anniversary of the Date hereof, 25%
of such Shares on and after the second anniversary of the Date hereof, 25% of
such Shares on and after the third anniversary of the Date hereof and 25% of
such Shares on and after the fourth anniversary of the Date hereof. All Shares
shall thereafter remain subject to exercise for the term specified in Paragraph
2 hereof, provided that Optionee is then and has continuously been in the employ
of the Company, or its Affiliates, subject, however, to the provisions of
Paragraph 6 hereof.

         4.       Method and Time of Exercise. The Option may be exercised by
written notice delivered to the Company at its principal executive office
stating the number of shares with respect to which the Option is being
exercised, together with:

                  (A)      a check or money order made payable to the Company in
the amount of the exercise price and any withholding tax, as provided under
Paragraph 5 hereof; or

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                  (B)      if expressly authorized in writing by the
Administrator, in its sole discretion, at the time of the Option exercise, the
tender to the Company of shares of the Company's Common Stock owned by Optionee
having a fair market value, as determined by the Administrator, not less than
the exercise price, plus the amount of applicable federal, state and local
withholding taxes; or

                  (C)      if expressly authorized in writing by the
Administrator, in its sole discretion, at the time of the Option exercise, the
Optionee's full recourse promissory note in a form approved by the Company; or

                  (D)      if any other method such as cashless exercise is
expressly authorized in writing by the Administrator, in its sole discretion, at
the time of the Option exercise, the tender of such consideration having a fair
market value, as determined by the Administrator, not less than the exercise
price, plus the amount of applicable federal, state and local withholding taxes.

Not less than 100 shares may be purchased at any one time unless the number
purchased is the total number purchasable under such Option at the time. Only
whole shares may be purchased.

         5.       Tax Withholding. In the event that this Option shall lose its
qualification as an incentive stock option, as a condition to exercise of this
Option, the Company may require Optionee to pay over to the Company all
applicable federal, state and local taxes which the Company is required to
withhold with respect to the exercise of this Option. At the discretion of the
Administrator and upon the request of Optionee, the minimum statutory
withholding tax requirements may be satisfied by the withholding of shares of
Common Stock of the Company otherwise issuable to Optionee upon the exercise of
this Option.

         6.       Exercise on Termination of Employment. If for any reason other
than death, permanent and total disability or retirement past the age of 60,
Optionee ceases to be employed by the Company or any of its Affiliates (such
event being called a "Termination"), this Option (to the extent then
exercisable) may be exercised in whole or in part at any time within three
months of the date of such Termination, but in no event after the Expiration
Date; provided, however, that if such exercise of this Option would result in
liability for Optionee under Section 16(b) of the Securities Exchange Act of
1934, then such three-month period automatically shall be extended until the
tenth day following the last date upon which Optionee has any liability under
Section 16(b), but in no event after the Expiration Date. If Optionee dies or
becomes permanently and totally disabled (as defined in the Plan) while employed
by the Company or an Affiliate or within the period that this Option remains
exercisable after Termination, this Option (to the extent then exercisable) may
be exercised, in whole or in part, by Optionee, by Optionee's personal
representative or by the person to whom this Option is transferred by devise or
the laws of descent and distribution, at any time within six months after the
death or six months after the permanent and total disability of Optionee, but in
no event after the Expiration Date. In the event this Option is treated as a
nonqualified stock option, then and to that extent, "employment" would include
service as a director or as a consultant. For purposes of this Paragraph 6,
Optionee's employment shall not be deemed to terminate by reason of sick leave,
military leave or other leave of absence approved by the Administrator, if the
period of any such leave does not exceed 90 days or, if longer, if Optionee's
right to reemployment by the Company or any Affiliate is guaranteed either
contractually or by statute.

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         7.       Nontransferability. This Option may not be assigned or
transferred except by will or by the laws of descent and distribution, and may
be exercised only by Optionee during his lifetime and after his death, by his
personal representative or by the person entitled thereto under his will or the
laws of intestate succession.

         8.       Optionee Not a Shareholder. Optionee shall have no rights as a
shareholder with respect to the Common Stock of the Company covered by this
Option until the date of issuance of a stock certificate or stock certificates
to him upon exercise of this Option. No adjustment will be made for dividends or
other rights for which the record date is prior to the date such stock
certificate or certificates are issued.

         9.       No Right to Employment. Nothing in the Option granted hereby
shall interfere with or limit in any way the right of the Company or of any of
its Affiliates to terminate Optionee's employment or consulting at any time, nor
confer upon Optionee any right to continue in the employ of, or consult with,
the Company or any of its Affiliates.

         10.      Modification and Termination. The rights of Optionee are
subject to modification and termination in certain events as provided in
Sections 6.1 and 6.3 of the Plan.

         11.      Restrictions on Sale of Shares. Optionee represents and agrees
that, upon his exercise of this Option, in whole or in part, unless there is in
effect at that time under the Securities Act of 1933 a registration statement
relating to the Shares issued to him, he will acquire the Shares issuable upon
exercise of this Option for the purpose of investment and not with a view to
their resale or further distribution, and that upon each exercise thereof he
shall furnish to the Company a written statement to such effect, satisfactory to
the Company in form and substance. Optionee agrees that any certificates issued
upon exercise of this Option may bear a legend indicating that their
transferability is restricted in accordance with applicable state or federal
securities law. Any person or persons entitled to exercise this Option under the
provisions of Paragraph 6 hereof shall, upon each exercise of this Option under
circumstances in which Optionee would be required to furnish such a written
statement, also furnish to the Company a written statement to the same effect,
satisfactory to the Company in form and substance.

         12.      Plan Governs. This Agreement and the Option evidenced hereby
are made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan, as it may be construed
by the Administrator. It is intended that this Option shall qualify as an
incentive stock option as defined by Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and this Agreement shall be construed in a manner
which will enable this Option to be so qualified. Optionee hereby acknowledges
receipt of a copy of the Plan.

         13.      Notices. All notices to the Company shall be addressed to the
Chief Financial Officer at the principal executive office of the Company at
31336 Via Colinas, Suite 101, Westlake Village, California 91362, and all
notices to Optionee shall be addressed to Optionee at the address of Optionee on
file with the Company or its subsidiary, or to such other address as either may
designate to the other in writing. A notice shall be deemed to be duly given if
and when enclosed in a properly addressed sealed envelope deposited, postage
prepaid, with the

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United States Postal Service. In lieu of giving notice by mail as aforesaid,
written notices under this Agreement may be given by personal delivery to
Optionee or to the Chief Financial Officer (as the case may be).

         14.      Sale or Other Disposition. Optionee understands and agrees
with the Company that the Shares acquired pursuant to exercise of this Option
shall not be disposed of by Optionee (whether by sale, exchange, gift, or other
form of transfer) other than to a Permitted Transferee (as defined below) or by
will or the laws of descent and distribution, until the consummation of a
primary initial public offering by the Company of its securities. Optionee
further understands that, under current law, beneficial tax treatment resulting
from the exercise of this Option will be available only if certain requirements
of the Code are satisfied, including without limitation, the requirement that no
disposition of Shares acquired pursuant to exercise of this Option be made
within two years from the grant date or within one year after the transfer of
Shares to him or her. If Optionee at any time contemplates the disposition
(whether by sale, exchange, gift, or other form of transfer) of any such Shares,
he or she will first notify the Company in writing of such proposed disposition
and cooperate with the Company in complying with all applicable requirements of
law, which, in the judgment of the Company, must be satisfied prior to such
disposition. In addition to the foregoing, Optionee hereby agrees that before
Optionee disposes (whether by sale, exchange, gift, or otherwise) of any Shares
acquired by exercise of this Option within two years of the grant date or within
one year after the transfer of such Shares to Optionee upon exercise of this
Option, Optionee shall promptly notify the Company in writing of the date and
terms of the proposed disposition and shall provide such other information
regarding the Option as the Company may reasonably require immediately before
such disposition. Said written notice shall state the date of such proposed
disposition, and the type and amount of the consideration to be received for
such Share or Shares by Optionee in connection therewith. In the event of any
such disposition, the Company shall have the right to require Optionee to
immediately pay the Company the amount of taxes (if any) which the Company is
required to withhold under federal and/or state law as a result of the granting
or exercise of the Option and the disposition of the Shares. The terms and
conditions of this Agreement shall be binding on any Permitted Transferee of
this Option or any Shares acquired upon exercise of this Option. "Permitted
Transferee" means Optionee's estate, spouse, heirs, ancestors, lineal
descendants, legatees and legal representatives, the trustee of any bona fide
trust of which one or more of the foregoing are the sole beneficiaries or the
grantors thereof and any person in which any of the foregoing, individually or
collectively, beneficially owns all of the capital stock, provided that in each
such case the transferee enters into an agreement with the Company acknowledging
the Company's repurchase rights under Paragraph 15.

         15.      Repurchase of Stock by Company. In the event of a Termination
of Optionee such that Optionee is no longer a director, officer, employee or
consultant of the Company or any of its Affiliates, the Company shall have the
right, upon such Termination and for a period of 120 days thereafter (the
"Repurchase Period"), to repurchase all or any part of the Shares acquired or to
be acquired by Optionee upon exercise of this Option and held or to be held of
record by Optionee at a price equal to the greater of (A) the fair market value
of the Shares as of the date of Termination and (B) the exercise price paid by
Optionee for such Shares. The Company shall exercise the foregoing repurchase
right by delivering a notice to Optionee during the Repurchase Period indicating
the total number of Shares the Company is repurchasing, together with a check in
an amount equal to the repurchase price per share multiplied by the

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number of shares to be repurchased (reduced by the amount of taxes (if any)
which the Company is required to withhold under federal and/or state law with
respect to such Shares). The determination by the Administrator of the
repurchase price shall be conclusive. Upon delivery of such notice and payment
of the repurchase price, Optionee shall promptly surrender the certificate(s)
representing the Shares repurchased by the Company. Whether or not Optionee
surrenders such certificates, upon payment in full by the Company of the
repurchase price for the Shares on or prior to the last day of the Repurchase
Period, all Shares subject to the foregoing repurchase notice shall
automatically be cancelled on the books and records of the Company without any
further action by the Company or Optionee. Stock certificates issued pursuant to
the exercise of this Option shall bear a legend indicating the foregoing right
of the Company to repurchase the Shares held by Optionee which legend shall
state:

         The shares evidenced by this certificate are subject to the right of
         Digital Theater Systems, Inc. (the "Issuer") under certain
         circumstances to repurchase all or any part of such shares upon notice
         by Digital Theater Systems, Inc. to the holder of this certificate as
         set forth in that certain Digital Theater Systems, Inc. Incentive Stock
         Option Agreement, dated as of January 28, 1998, a copy of which is on
         file at the offices of the Issuer.

For purposes of this Paragraph 15, Optionee's employment or service shall not be
deemed to terminate by reason of sick leave, military leave or other leave of
absence approved by the Administrator, if the period of any such leave does not
exceed 90 days or, if longer, if Optionee's right to reemployment by the Company
or any Affiliate is guaranteed either contractually or by statute. All of the
foregoing provisions of this Paragraph 15 shall terminate upon the consummation
of a primary initial public offering by the Company of its securities.

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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.

                                           DIGITAL THEATER SYSTEMS, INC.

                                           By: _________________________________
                                               Bill Neighbors
                                               President

                                           OPTIONEE

                                           By: _________________________________
                                               Name:

                                               Address:
                                               ________________________________
                                               ________________________________
                                               ________________________________

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