The DVD War Against Consumers

Makers of new DVD players are going too far in copyright protection efforts, but buyers needn't take it lying down

Having grown tired of one war, we're on the eve of another, complete with alliances, secret codes, and laser beams. No, not Iran -- it's the fight over the next generation of DVD devices. The real battle isn't between Sony (SNE) and Microsoft (MSFT) and their chosen formats, it's between the manufacturers and us -- the consumers, the ones who ultimately pay for it all. And the battle is over Digital Rights Management (DRM), because in addition to increased storage, these new disks are packed full of copy-protection functions, some of which impair our ability to use the content we pay for, the way we like and are legally entitled to.

Sony is championing a standard called Blu-ray, Microsoft is pushing HD-DVD. Both formats have plenty of corporate backers. The upcoming PlayStation 3 will support Blu-ray, the Xbox 360 will get an add-on drive that uses HD-DVD.

Both standards incorporate sophisticated DRM technology. The current crop of DVDs uses a copy protection scheme that encrypts the disk, but that scheme was broken several years ago and the hack was widely incorporated in innumerable freeware DVD decryption programs. The movie studios have vowed not to let that happen to them again.


But all software-based copy-protection schemes can be broken. The only way a DRM can really work is to control all of the hardware the video data flow through, including the monitor. The problem is that at some point an unencrypted video signal is sent to a display device. It can be split off before it gets there or videotaped once it's on the screen.

The AACS (Advanced Access Content System) standard supported by both the Sony and Microsoft camps addresses this problem. The standard calls for scaling down HD content to a low resolution if the player isn't hooked up to an HDCP-compliant connection. HDCP (High Bandwidth Digital Content Protection) is a DRM system invented by Intel (INTC) that attempts to control video and audio as it flows out of a player and onto a display. In other words, if the player is connected to a monitor without the right cables, the quality of the image will be deliberately degraded.

Blu-ray, however, goes beyond the AACS, incorporating two other protection mechanisms: The ROM Mark is a cryptographic element overlaid on a "legitimate" disk. If the player doesn't detect the mark, then it won't play the disc. This will supposedly deal with video-camera-in-the-theatre copies.


Even more extreme is a scheme called BD+ that deals with the problem of what to do when someone cracks the encryption scheme. The players can automatically download new crypto if the old one is broken. But there's an ominous feature buried in this so-called protection mechanism: If a particular brand of player is cryptographically "compromised," the studio can remotely disable all of the affected players. In other words, if some hacker halfway across the globe cracks Sony's software, Sony can shut down my DVD player across the Net.

The Blu-ray's DRM scheme is simply anti-consumer. The standard reflects what the studios really want, which is no copying of their material at all, for any reason. They're clearly willing to take active and unpleasant measures to enforce this. Last year's Sony/BMG rootkit fiasco comes to mind (see BW Online, 11/29/05, "Sony BMG's Costly Silence"). The possibility that they would disable thousands of DVD players, not because they're hacked but just because they might be vulnerable, would have been unthinkable a few years ago; it's clearly an option today.

What do consumers really want? We want high-quality video and sound, of course. These days we also want interoperability. When we buy content, we expect to play it on every gadget that we own. The newest video servers require content to be copied to the hard drives, so that they can stream video throughout the house.

Soon, we'll also want to take the movies that we paid for with us on small multimedia players like video iPods.


I support the rights of the studios to protect their content right up until it stops me from doing something reasonable that I want to do. Blu-ray crosses this line.

So should the studios just roll over and close their doors? I have some suggestions for them:

• Find a new pricing model. There's an iTunes for movies out there somewhere.

• Fuggetaboutit. It's true that lots of people download movies off the Internet or buy bootleg copies, but how many adults will sit in front of a computer screen and watch a pixilated movie or be content to watch a DVD where someone's head keeps blocking the camera every few minutes? The kids who download movies off the Net can't afford to buy a real copy anyway. Stopping them from downloading and watching a movie doesn't translate into an extra sale.

• Go through the motions. Build a minimal DRM, enough to deter people from casual copying. Then, grit your teeth and bear it.


Part of the profit on movies comes from secondary-channel sales. The days when the studios made all of their money from the box office are long over. Now, they show movies on cable, on pay-per-view, in hotels, and on airplanes. There are too many places for the content to get out. The more the studios widen their channels to distribute their product, the more opportunities there will be for someone to steal a copy. Plus, the move to digital distribution of movies in theaters means that there's a much better chance of someone snarfing a nice, clean, digital copy.

What should consumers do? Well, I'm a gadget freak but I'm not going to rush out and buy one of the first players available. When I do, given a choice between Blu-ray and a less-restrictive DRM format, I'll go with the latter, all other things being equal. As to the DRM stuff, if you need to copy a DVD for a legitimate purpose and the protection scheme won't let you and someone posts a hack on the Net, have a choice to make.

Before it's here, it's on the Bloomberg Terminal.