Cracking the HD-DVD code

Sam Eaton Dec 29, 2006

BOB MOON: There are lingering questions about the legality of copying a DVD movie — but it is possible. Computer programs to duplicate DVDs have been circulating on the Internet for years — ever since a Norwegian teenager cracked the code that was supposed to prevent piracy. The movie industry vowed that would never happen again when the next generation of video disks was introduced.

Well, guess what? A computer hacker is now claiming he’s cracked the supposedly hacker-proof code for the budding High Definition DVD technology.

Marketplace’s Sam Eaton looks at what this may mean to Hollywood’s hopes for boosting sagging sales.

SAM EATON: A hacker known as “Muslix64” has borrowed a page directly from the industry he’s targeting.

He’s posted a dramatic short film on YouTube documenting how he unlocked the encryption in several High Definition DVD movies and downloaded them onto his computer.

Peter Brown heads the Free Software Foundation. He says the hackers are getting more creative for a reason. They’re fed up with Digital Rights Management, or DRM, which prevents consumers from sharing the media they purchase, or even playing it on different brands of media players.

PETER BROWN: The industry has lost its way and they’re not servicing their customers anymore. They’re servicing their content providers, the big media companies, who believe, who still believe that DRM can work for them.

Brown says cracking encrypted media has become a form of protest. But it’s also a serious financial challenge for the entertainment industry, says Harvard Business School’s Felix Oberholzer-Gee.

FELIX OBERHOLZER-GEE: What it means is that the content that is out there right now can be copied although this new protection system was in place.

In other words, perfect copies of pirated HD-DVD’s could be hitting the streets near you. But entertainment analyst Hal Vogel says there is a silver lining for the industry: the timing.

HAL VOGEL: If you’re going to be attacked, be attacked early on when there aren’t very many units out there to be affected rather than later on.

Vogel says the hacker’s haste to be the first has given the entertainment industry time to reconfigure the code before HD-DVD goes mainstream.

In Los Angeles, I’m Sam Eaton for Marketplace.

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