Thursday, July 27, 2006

They’ll Never Learn (Part 27)

The age of authorized DVD burning of downloaded movies began in earnest last week with two announcements. First, Movielink, which is owned by MGM, Sony, Universal and Warner Bros., announced a licensing deal with Sonic Solutions to enable subscribers to burn downloaded movies onto DVDs. Then, two days later, CinemaNow, owned by a number of investors including Microsoft, Cisco, Blockbuster and Lionsgate, released a working burn-to-disc service. So far, so good—consumers can finally legally burn their own DVDs and play them anywhere. Sounds too good to be true? It is.

According to Paul Sweeting at Video Business, the story is a lot more convoluted. It seems that the movie studios are in favor of using CSS (Content Scrambling System,) the standard encryption method used in every DVD player. However, there’s a catch—the movies would have to be recorded on a new kind of DVD that’s been “pre-keyed” to support CSS. So, you wouldn’t be able to use your garden-variety DVD-Rs to record movies; you’d have to buy special, and undoubtedly more expensive, recordable discs.

In return for accepting this “light” encryption scheme, the studios want consumer electronics companies to add additional security features, including watermark detection, to all their DVD players going forward. Given that more than 169 million DVD players without these features have been sold in the U.S. alone as of the end of March, this would be equivalent to closing the barn doors after the horse has gotten out and the barn has burned down.

There’s no way that the major consumer electronics companies would, or even could, accept this deal. Chinese competitors have decimated their profit margins on DVD players, so there’s no room for them to either raise prices or absorb higher costs. (After all, that’s the reason why the big CE companies are pushing HD DVD and Blu-Ray to replace DVDs—the blue-laser formats offer higher prices, better profit margins and an ongoing stream of royalties.)

By contrast, the CinemaNow system is based on FluxDVD, which includes a Microsoft Windows Media Format-compatible Digital Rights Management (DRM) copy protection system (instead of CSS) and allows movies to be burned onto any DVD-R. One downside of this scheme is that FluxDVD’s dependence on Windows Media Format means that discs can only be burned on PCs running Microsoft Windows. Another downside is that there’s a chance, however small, that a DVD-R burned from a FluxDVD download might not be playable in some DVD players.

So, you’ll have a choice of two systems, but both will put demands on consumers: Either you’ll have to buy special recordable DVDs, most likely at a higher price, just for Movielink, or you’ll have to have a Windows PC and run the risk that the movie you burn might not play on your DVD player. It gets even better—apparently, there’s a schism among the studios: The Protestants (er, I mean Sony, Disney, Universal, MGM and Lionsgate) are willing to accept a CSS-only system with no new security features in the players, while the Catholics (sorry, I mean Warner Bros., Fox and Paramount) are still holding out for added security features in the players. The Protestant camp backs CinemaNow, while the Catholics back Movielink, even though the Protestants own three-quarters of Movielink. That makes no sense to me, and seems dangerously close to illegal collusion.

Representatives of all of the major studios and CE manufacturers are meeting this week in Los Angeles to try to agree on a single burn-to-disc system. If recent history is any guide, they’ll fail miserably—and still leave the door wide open for bootlegging. The worst of all possible worlds. They never learn.

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