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Will Video Kill the DRM Stars?

Some of the largest consumer tech brands in the world -- Apple Inc. (Nasdaq: AAPL), Microsoft Corp. (Nasdaq: MSFT), and now Google (Nasdaq: GOOG) -- have their own flavors of video digital rights management (DRM). But that doesn't necessarily mean that smaller IPTV-focused DRM companies like Verimatrix Inc. and Widevine Technologies Inc. are dead men walking.

On Friday, for instance, Google announced it will begin selling and renting videos from a major television network, a professional sports league, cable programmers, and a slew of independent producers and film makers. Google is likely using its own DRM software for this, making it another piece of business that standalone DRM companies won't get.

But even though they're not powering Apple's iTunes downloads, Google's video downloads, or Microsoft's IPTV deployments, some DRM vendors say they can make money as the Internet becomes the world's largest video distribution channel.

DRM vendors say the fact that so many companies have built their own DRM solutions presents an opportunity to serve as translators between the dozens of proprietary video DRM schemes out there and the consumers and companies seeking video content from the Internet. (See Intel Teams With Google, AOL.)

Verimatrix CEO Tom Munro says his company’s goal is to provide a "universal" DRM allowing video to be opened by video players of all stripes, not just ones made by the distributor of the content. (See IPTV Security: Content Is King.) “Ultimately there is going to be a call for a limited number of standards,” he says. “I’m sure Google is qualified to develop the kind of software we’re talking about, but interoperability is going to be the key -- the ability to work across multiple domains, whether that’s Apple or Microsoft or Google in this case.”

Munro says a set-top box loaded with Verimatrix DRM may one day be able to decrypt video content from open Internet channels like Google and and from closed networks like AT&T's. (See Verimatrix, i3 Team on STBs.)

Other opportunities exist for standalone DRM companies. Widevine CEO Brian Baker, who says his company has been in discussions with Google, points out that the greatest piracy risk comes after the video file has been decrypted at the desktop.

“You can do a Google search on ‘how do I break the Google DRM?’ and you’ll come up with a page on how it's broken, and it all takes place post-decryption,” Baker says. Indeed, a quick search revealed that “screen scraping” has been around a long time. Internet hacking specialist and author Eric Raymond calls it “an ugly, ad-hoc, last-resort technique,” suggesting that hackers have spent much brainpower figuring out better ways of doing it. (See Widevine Updates DRM Software and Widevine Wins TVN Contract.)

But the DRM companies say they may be able to live prosperously by “handing off” secure video content from the closed, or "walled garden," video networks of companies like AT&T Inc. (NYSE: T) to the open realm of the PC.

“We’re working with Microsoft on their Media Center as a DRM bridge or gateway, says Robin Wilson, VP of business development at Nagravision SA . The Media Center itself is meant to act as the bridge over which Internet video reaches the home television, with a lot of file management and other capabilities baked in.

“In that case, we are handing over the viewing rights to the Microsoft DRM system for in-home use. The net gain in that is the operator is glad they have an end-to-end [DRM] system as well as more video content in the home,” Wilson says.

One might suppose that the “walled garden” video distribution models from the likes of AT&T and Verizon Communications Inc. (NYSE: VZ) depend most on DRM software to make sure only those customers who pay for content get to watch it. Those walls, after all, are made of DRM code.

But from the point of view of the content owners, the open Internet is a far riskier place than TV networks in terms of content security. If more consumers begin relying on the Internet as a primary place to get new entertainment content, DRM specialists like Verimatrix, Widevine, and Nagravision will have lots of content to protect, even if they're not working for Apple, Microsoft, or Google.

— Mark Sullivan, Reporter, Light Reading

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