Studios Eye New Anti-Copying Move

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Hollywood is cautiously optimistic about a new cooperative
effort by five electronics makers to limit the number of copies that viewers can make of
digital-cable movies.

The five companies -- Hitachi Ltd., IBM Corp., NEC Corp.,
Pioneer Electronics Corp. and Sony Corp. -- announced last week that they will work to
create invisible electronic watermarks for digital movies and videos in an attempt to
prevent underground sales of clear and crisp copies.

The new technology places an undetectable watermark on the
product -- whether it's delivered via videocassette or over cable and
direct-broadcast satellite signals -- which permits the studio to specify which movie or
event can be copied in a digital format, a representative from the group said.

A chip that can be placed in digital-cassette recorders or,
potentially, in digital-cable boxes could detect the watermark. The technology could still
allow analog recording of movies, but it would eliminate or limit the number of digital
recordings that a consumer could make.

The issue of recording pay-per-view movies has been a
sticky one for both Hollywood and cable operators.

Studios, wanting to protect their product, frown on
consumers making video copies of movies from PPV. But the studios haven't put up much
of a fight because cable operators believe that the ability to tape PPV movies is a major
draw for consumers, particularly since the home-video business copy-protects its product.

But as more operators upgrade to digital technology -- and
the prices for digital-video recorders come down -- studios are concerned about the
proliferation of pirated copies of digital movies.

"You can make a digital copy of a digital master: You
have a pristine copy, and that could be a major problem for our business," said one
studio executive, who took a wait-and-see attitude on the latest development.

"I'm interested in finding out about any new
technological advances in copy-protection," said Jeffrey Calman, senior vice
president of sales, planning and business affairs for Warner Bros.

The companies hope to implement the technology first for
DVD systems later this year, and to eventually roll it out to digital-cable and DBS
services.

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