As theatrical films and other content proliferate across multiple screens and platforms, digital-rights management and such complementary technologies as watermarking have never been more important.
Content owners are also exploring other ways to take on piracy, such as moving up release windows.
“Media companies must now have the R&D to protect the content and find models to monetize it,” said Mark Kirstein, president and co-founder of MultiMediaIntelligence, a research and analysis group.
The stakes are high: Worldwide online video revenue is expected to exceed $4.5 billion by 2012, up from $1.2 billion in 2008, according to research group In-Stat's World Report on Online Video. And by 2012, according to In-Stat (a sister company to Multichannel News), 90% of U.S. households will have access to broadband, with 94% watching online video.
An IMS Research study estimates that by 2013, 255 million TV households worldwide will be watching HDTV. According to Rentrak, the number of unique HD titles increased by 161% over the first six months of this year, and the number of on-demand orders jumped to 3 billion in 2007.
Meanwhile, the Motion Picture Association of America puts annual losses to film piracy at a whopping $18 billion.
“We're using DRM and new technologies like watermarking in our anti-piracy efforts,” said MPAA executive vice president and director of worldwide piracy John Malcolm. “Studios are now watermarking films to determine the precise theater where the film was stolen.”
While such measures have led to some “high-profile arrests,” Malcolm said, the Web and new technologies have made it increasingly difficult to combat piracy.
“There will always be people who pirate DVDs, but the Internet is a different world,” he said. “One copy can spread around the globe virally. Technologies have enabled people to transfer large files around the world efficiently to audiences who would never have seen the content.
“And you can't ignore DVD,” he added. “In the hard-goods world, there's serious organized crime. So the strategy to go after them is different. They are larger and more sinister.”
One solution, according to some experts, may be to address the issue of earlier release windows.
“The higher on the release chain, the higher the value,” said TVN Entertainment chief technology officer Dom Stasi. “Until now, people had to find content at the theater with their camcorders or be in the DVD distribution network. Now, we're distributing digital files in the DVD space and to affiliates via satellite, so signals better be encrypted and protected.”
Earlier release windows could also prompt content owners to rethink their business models, said Rob Logan, CEO of ContentGuard, a player in the content-protection space.
“A community should be created around the release, with posters, memorabilia, movie images on a cellphone, ring tones,” said Logan. “That's where the creative business model must come from — merchandising and business innovations.
“We want to keep technology advancing to stay ahead of piracy, but now it's about new business models and protecting the consumers.”
It's also about measuring the effectiveness of DRM technologies. “One measurement of security is how fast pirated copies show up on the Internet,” Logan said. Copies of this summer's blockbuster, The Dark Knight, didn't surface until after its initial release to theaters, he noted. “That was an example of how DRM can work,” he said.
Added Stasi: “A study using very primitive forensics for movie releases determined where and when 178 of 250 films were intercepted, and 95% were intercepted on the day and date of release, with just 5% pirated during DVD, [pay-per-view] and subscription windows. That window is changing pending earlier releases, which puts cable, PPV and VOD in the high-crime neighborhood of day-and-date release.”
And that “high-crime neighborhood” is expanding, as more mobile and consumer-electronics devices incorporate digital rights management.
“Content providers are putting more content over mobile broadband networks, so the need for DRM is exploding, especially for CE devices, and content providers are selecting DRM technology based on the acceptance of content over the Internet,” said Brian Baker, CEO of Widevine Technologies, a supplier of DRM and forensic watermarking to such Hollywood distributors as CinemaNow.
But methods to effectively secure content as it moves across the Internet and via mobile devices are still evolving. That has some content providers taking a wait-and-see approach.
“Entertainment companies are holding back, and most tell us what we're seeing out there are DRM tests,” said Sean Barger, CEO of Equilibrium, a provider of rights-management and transcoding for Web and mobile video.
“There are lots of players with different models,” he added. “It can be a protection nightmare.”
Protecting content delivered via mobile devices is of particular concern, said Jian Zhao, chief technology officer of software and technology solutions at Thomson. “That's why you don't see much high-value content to mobile devices.”
What's becoming apparent is how a piece of content's value can be measured across multiple delivery screens, said Cathy Hetzel, president of Rentrak's advanced media and information division.
“We're seeing more titles premiered on-demand before linear channels,” she said. “It's an interesting phenomenon and indicates the interest level of that title.
“As we launch digital downloads commercially, we can measure the relationship between windows and if there's an impact and value connection. It's now even more important to measure the value across all windows.”
For instance, Warner Bros.'s recent decision to release 85 classic films to video-on-demand — many in HD format — is significant from a DRM perspective, according to those involved with the technology.
“It's more about where a movie is in the distribution cycle that determines its value,” said Cinea vice president of marketing Laurence Roth. “Once at DVD, much of the pirate value is gone, and once to broadcast all the value is gone. But some are asking for the same level of control and watermarking.”
And it's watermarking that is emerging as the go-to content-protection technology.
“In the DRM category, there is a resurgence to facilitate earlier release windows for the Internet and mobile platforms and forensic watermarking is at the fulcrum point between studios and DRM,” said Stuart Rosove, vice president of media and entertainment for Digimarc, a provider of watermarking and DRM technologies.
“Persistent encryption is a mechanism that sends encrypted versions all the way to the TV set,” Stasi said. “It's not easy to institute in already embedded devices, but in newer devices it will take the symmetry out of the mix, and you won't have to re-encrypt at the headend. We're in the process of meeting that challenge.”
Added Kirstein: “All of the other industries have been through this — telecom, computer, record labels, music. Now, the studios are going through it. It is an interesting social experience dealing with the culture and how to integrate technology into that culture.”