This is not true at all and demonstrates a profound misunderstanding of how surround sound works.

Nintendo 64 games like Donkey Kong 64 and Conker’s Bad Fur Day supported surround sound. Even Star Fox on the SNES supported surround sound. All through composite cables.

It works by encoding multiple channels into two channels, so it can then decode those channels to send the proper signal to the proper speaker. For Dolby specifically, you need a Pro Logic compatible receiver, which could decode that signal. If you don’t have a Pro Logic compatible receiver then you will only hear stereo output.