Combating Digital Piracy

Macrovision Corporation develops digital rights management and software licensing technologies to combat widespread casual digital piracy. In a wide-ranging interview, MARTIN BROOKER, Director of Sales, Entertainment Technologies Group EMEA, tells JEAN-LUC RENAUD, DVD Intelligence publisher, what the company has in store.

Just how is Macrovision organised?

Macrovision has two primary target areas. The first is protecting rights owners in the entertainment sector, including music, games and video – with our Hawkeye and RipGuard products. The second is enabling software companies in the enterprise space to license their content to end user organizations.

Macrovision was created by John Ryan who designed its first Analogue Copy Protection System. Over the years, the company has acquired complementary technologies to bring in a comprehensive suite of Digital Rights Management (DRM) offerings to market.

Today, Macrovision employs over 800 people, with offices in every major location around the world. Our Europe, Middle East, Africa (EMEA) activity is managed out of our Maidenhead offices in the UK, and the company is headquartered in Santa Clara, California.

With the recent acquisition of Trymedia, Macrovision has increased its product range within the games sector, offering on-line solutions in addition to physical disc protection already provided with SafeDisc. This is an important area for Macrovision, with the growth of the games industry and the high value of its content.

How many DVD titles has Macrovision protected?

The vast majority of film DVDs that come onto the market are protected. To date about 4. 5 billion discs have been protected with Macrovision.

Is the cost of the license recouped by the extra revenue generated by the reduction in pirated copies?

The best answer to this question is to use a recent example. Independent filmmaker Nick Love, who made The Football Factory and It’s All Gone Pete Tong, posted his movies on the internet – on a peer-to-peer service. His content wasn’t protected and he failed to realise the revenue he expected both from this distribution channel and DVD sales - primarily – because black market versions were so easy to obtain.

Casual copying by consumers on all media certainly has an impact on potential revenue. This is why Macrovision protects more than the physical disc. We have developed a technology, Hawkeye, which protects content carried on the majority of peer-to-peer networks.

Macrovision's message is: your content should be protected as early as possible from appearing on the internet . . . if you can reduce the proliferation of those video files on peer-to-peer services, there will be fewer products available on street corners and therefore the latent demand for the content, once it goes onto DVD, will remain high.

Where does your work stop and that of content owners start?

There are a number of avenues that content owners take. We are not the only approach. We offer one course of action. When rights owners look at the piracy issue as a whole, peer-to-peer is one issue, international piracy syndicates selling DVDs on street corners is another, casual copying – rip and burning of DVDs – is still another. We aim to work with them across all those areas.

Historically, we were active exclusively in the physical media protection space, but in many cases, this is the last segment of the lifecycle of the movie. We now actively work to protect content earlier in the product lifecycle. Studios working with us to protect their movies from proliferating on on peer-to-peer internet services, for example, will see an increase in revenue at the box office and when the movie appears on DVD, television and pay-per-view channels.

In terms of action from the rights owners, the music industry has been particularly proactive in targeting prolific downloaders of unlicensed content focusing on the people downloading larger quantities of content and sending out 'cease and desist' letters.

We must also address these issues in the wider world. In many cases, people use peer-to-peer as an avenue to grab content at the most convenient location that offers access to high-speed internet connection. This tends to be their workplace or university. It is therefore important to educate those responsible for these businesses and institutions.

What is your view of the recent Paris Appeal Court ruling against a copy-protected DVD title?

We are following the case with interest [for background story, click here]. There has been an appeal by the producer, Studio Canal/Universal. I think everybody was stunned by the decision. The European EU copyright directive is currently going through the French parliament which makes it quite clear that brands have the right to protect their content if they so wish.

It’s important for Macrovision, because for the first time, companies who invent technologies that protect content also have rights. In other words, if someone knowingly tries to circumvent our copy-protection technology on the disc itself or built-in DVD machines, we are now legally empowered to take action to protect ourselves. The copyright directive is clear: If you knowingly use software or devices to circumvent protection, this is an illegal act.

“Que Choisir” case does not, as we understand it, set a legal precedent in France. It’s only applicable on that particular movie (Mulholland Drive). The appeal is going forward and the view from Macrovision, as with the producers, is ‘let’s wait for the appeal’. At the same time we’re waiting for France to implement the copyright directive, which will bring them in line with every other EU member state.

Does Macrovision have technology to copy-protect content broadcast over-the-air?

Not in the free-to-air space, however. We do protect the vast majority of pay-per-view services and premium channels like Sky Box Office or Premiere in Germany. We also protect customers who offer legitimate box office movie packages within the short window between theatrical and DVD release.

Also, as we move into subscription video on demand, I think the movie studios are going to be more stringent in ensuring that broadcasters, however that term applies, protect their content. Obviously subscription VOD involves a huge library of content that’s going to be available to people and, if it’s not protected, then users with DVD recorders and hard drive devices are going to be able to capture content very easily.

As for the transmission free-to-air of content, that’s up to the broadcasters. We’ve have not yet been approached by broadcast tv executives requesting protection for their free-to-air offerings. Perhaps this is just a matter of time?

Now that you already service all the major content holders, how will you grow revenue in the future?

First of all, the market for the DVD format will continue to increase for the foreseeable future; there are still rights owners out there in corners of the world that we don’t have as customers.

Also, we have a range of technologies for alternative content delivery platforms. We’ve been providing systems to prevent analogue holes – people copying using VHS recorders and DVD recorders. And of course peer-to-peer internet services are an increasing cause of both industry concern and opportunity – this will be a very significant market for us in the future. In addition, we are now moving aggressively into the games business.

We will also be looking to acquire complementary technologies and companies to enable us to grow.

Moving forward, we see Macrovision as the single point of contact for managing entertainment content – preventing the illegal use of content, but vitally enabling its managed distribution. Stopping someone from illegally accessing content is one aspect of the approach but not the full story. The second aspect, that is becoming more and more important, is to redirect the user through a creative, managed distribution process to go on to purchase additional content.

The level of protection and coordination with law enforcement agencies varies from country to country. What's your overview?

Historically, the UK has always been at the forefront of policing itself and ensuring that the whole supplier chain is protecting the rights owners. Macrovision, together with the rights owners, lobby central government to ensure that they also understand the issues at stake.

We do the same across Europe. We spent a lot of time in Germany last year, lobbying the members of the various political parties, to make sure that, as they worked on the EU copyright directive, they understood the concerns of the rights owners and what technology can and can’t do to protect rights. It’s vital when drafting policy or legislation to consider how technology can play a key role in policing rights protection.

Western Europe has to understand that if it wants a creative economy, it’s got to allow its creative thinkers, its producers and directors to be able to monetise their creative thought. If they can’t make money because of the piracy problems then those people will go somewhere else in the world to produce their movies.

Are you happy with the EU Copyright Directive? Did you make a successful representation?

Yes, we had direct input into educating the people in Brussels about technology measures and copy protection. Our appraisal of the copyright directive is positive – I believe the right level of protection has been included. If people go out of their way to buy a device, a piece of software, or a technology to circumvent Macrovision protection this should be as an illegal act. And that is very much part of the legislation.

Do forthcoming high-resolution formats introduce new challenges, calling for a new strategy?

Right now we don’t play in that space in terms of providing copy protection. Whatever format emerges, and there are several, it will most likely come with its own in-built protection. Of course, history shows us that there’s always been an opportunity for third-party companies like Macrovision to provide additional protection, and perhaps here, our policy of enabling and managing distribution will be as important as protection.

Irrespective of future developments, the DVD format has many years ahead of it and so our revenue streams in protecting and enabling content on this format will continue to grow.

How successful is RipGuard?

Very successful at what it is designed to do – stop occasional consumer copiers from stealing content. Of course, no system can ever be failsafe and everything that’s been engineered can be reverse-engineered. As such, RipGuard is aimed at the majority of consumers who will not go the extra mile to rip a movie – those who will not try to find a device or a piece of software to circumvent the protection technology.

For those people who do go the extra mile, we now have the European Copyright Directive that makes it impossible to hide behind ignorance. This area of compliance is where Macrovision is making a big industry impact.

In terms of trying to stay one step ahead, we spend a lot of money on R&D, looking at new ways of improving protection. But obviously, within the DVD space, you can only take it so far.

To conform to the DVD specs, and to ensure 100% playability, we are unable to turn the strength of the protection up too high without locking the content from many players around the world. In this case, the studios are quite clear in their communications to us: ‘the DVD must play on every single device around the world. We want the strongest protection but the first priority is that it must play’. So that’s always the struggle within: to create the best level of protection that always plays.

Are you recruiting ex-hackers?

We recruit people with a strong software engineering background and also understand the complexities of cryptography and encryption technologies. It is perhaps inevitable that a small number of such specialists may have been hackers in the past.

You have been pointing to a new strategy to go beyond prevention towards enabling users. Can you expand on it?

The music industry has been very concerned – and rightly so – about a consumer backlash from people who have got used to copying. Historically, it was copying to tape and then, with the prevalence of the CD-ROM, copying music via the PC became incredibly easy. In response to this, the music industry deployed copy protection technologies. However, it is important to note that neither do they want to alienate their consumers, and Macrovision has developed technologies to support this dual goal.

Let’s take an example. When you buy a music album today, you get additional features and content as a matter of course – graphics, sleeve notes, lyric information, details of live shows and web links to the band’s site.

But moving forward, users can also be offered additional bonus material: perhaps a bonus track that is unlocked after a visit (and small payment) to the website, or even, with the permission of certain rights owners, the ability make additional back-up copies. This is a part of the market that Macrovision is now driving to enable security with an improved customer experience.

For example, Trymedia, a recent acquisition by Macrovision, operates in the games space and offers users the ability to ‘try before you buy’. Gamers can download certain levels and if they wish to unlock other areas or the full game, they must then make a purchase.

This is about working with the DRM technologies to protect the rights owners while enabling greater consumer freedom.

This idea also translates to the video sector, although there are challenges inherent in the fact that the players are not intelligent devices, and one has to work within the confines of the technology. However, there is no reason why brands can’t deliver content with DRM technologies that enable future consumption.

An example would be buying a disc with two movies on – the second being unlocked after a specified launch date. Peer-to-peer usage at the moment is all about prevention – users searching for a protected movie and being stopped from viewing it. But the opportunities of offering a trailer for the movie, a money off voucher for the cinema, or a redirect to the film’s official site should a search prove unsuccessful are significant. This is where prevention becomes enabling – and even super-distribution for the future.

The lesson that we’ve all learned over the last few years is that if you just prevent someone from doing something and don’t offer an alternative, they will try to get it one way or another.

We saw this in the music industry, with the emergence if iTunes. As soon as there was a legitimate alternative to illegitimate P2P sites, consumers started downloading vast quantities of paid-for music content. Of course, there will always be a minority of people who want everything for free, however, offer an alternative that is perceived as adding real value, and people will pay.

Are you involved in copy-protecting digital cinema?

We’re not playing in the whole digital cinema space currently, but the studios are developing technologies either in-house or working with partners to develop a solution to deliver that content. That’s not to say we won’t be in the future. Clearly digital cinema is a very attractive proposition for the studios because they can control the distribution and prevent those illegal copies, and screeners, from appearing on the market.

What is today's biggest challenge you have to address?

My focus here in Europe is to ensure that we don’t miss out on revenues today because too often the industry talks about tomorrow’s technologies. Our challenge is to ensure that we educate a wide audience across Europe as to how easy it is to copy content – and how simple it is to find a management solution.

The industry has to be pragmatic and not forget some of the basic principles. While international piracy and peer-to-peer piracy are significant challenges, it is important to react to the potential threat of DVD recorders. People are buying them, pressing the red button and expecting to make copies. Action needs to be taken against this – the devices need to be copy-protected and the market needs to be educated.

Of course, it is also vital that we are seen to be moving forward as a company. We are very clear about our direction and key role in enabling the entertainment industry to manage the delivery of its content – providing both protection and enabling technologies to find that ideal balance....

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