Verimatrix gives studios another reason to offer movies earlier to homes

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The major Hollywood studios persuaded the Federal Communications Commission last year to allow them to offer movies through pay-TV services several weeks earlier, before they’re released on disc. They didn’t start testing the service until mid-April, however, and have made it available only through DirecTV.

On Tuesday, San Diego-based Verimatrix announced a watermarking technology that studios could use to help combat piracy on streamed movies, potentially encouraging them to offer more early-release films. The watermarks won’t make the offer more appealing to consumers or the studios’ other distribution partners, though, and those hurdles are at least as big for the early releases as the technological limitations.

The FCC’s decision allowed pay-TV services to offer early-release movies only through encrypted digital outputs on their set-top boxes. Although that restriction rendered the films inaccessible to viewers with older TV sets equipped only with analog or unencrypted digital inputs, it also deterred viewers from recording and sharing the films online. That deterrent was a prerequisite for studios to make movies available in high definition as little as two months after they had appeared in theaters.

Petr Peterka, chief technology officer of Verimatrix, said another prerequisite from the studios was the ability to put a unique tag into each early release film. Such a ‘forensic watermark’ would enable the studios to trace any copy of the film they found online or at a flea market back to its source.


Peterka said the conventional approach involves having a set-top box put a watermark in a movie after it reaches the customer’s home. Verimatrix’s new StreamMark technology implants the watermark at a pay-TV service’s headquarters, enabling it to work regardless of the type of device used to decode and display the on-demand movie stream. That’s important for cable operators, who may have multiple types of set-top boxes in their customers’ homes -- and, eventually, a growing number of customers with TV sets that can tune in cable services even without a set-top.

The point of the watermark is to serve as an anti-piracy backstop. The transmission into the home is scrambled, as is the stream between the set-top and the TV set. But once the movie is displayed on the screen, anyone with a high-definition camcorder and a tripod can make a reasonably good copy -- with none of the risk that comes with using a camcorder in a theater. StreamMark embeds a unique tag in the video that’s imperceptible and all but impossible for pirates to find and remove. The company’s tools can detect the watermark even in a poor copy of a film, then trace it to the home where the recording was made, Peterka said.

Mike McGuire, a media analyst for Gartner, said products such as StreamMark help reassure content providers about the risks involved with digital distribution. The point is to show that even with consumer devices that pay-TV operators do not control, ‘there’s a fairly safe way’ to offer early release movies, McGuire said.

Naturally, the studios would prefer to stop people from making copies in the first place. Some types of Blu-ray players are built to detect a particular kind of watermark used in films shown in theaters; if they find the watermark within a disc, they won’t play it. The StreamMark approach may also be of limited use in copyright enforcement actions because it identifies the account used to order the movie, but not the specific person who made the recording. Nevertheless, McGuire said content providers realize ‘there’s only so much they can do’ to stop people from making unauthorized copies of the movies they watch at home.

So far four studios have offered a handful of early-release movies through DirecTV, charging just under $30 for a single viewing. The service is aimed at people who love movies but have trouble getting to the theater, such as parents with young children. But that’s a hefty premium to pay for the privilege of watching a movie as little as a month before it comes out on DVD, and just a few weeks before it’s available through conventional video-on-demand services for $5.

The price tag is one obstacle to mass adoption. Another is the requirement for a high-def set-top with a particular type of encrypted digital output, which eliminates about two-thirds of DirecTV’s customer base. And a third is the fierce opposition from theater chains and some filmmakers, who contend that the early releases will discourage people from watching films in theaters.

So even the studios that favor early-release movies are likely to proceed slowly. What StreamMark does is give them one more reason to keep going.

-- Jon Healey

Healey writes editorials for The Times’ Opinion Manufacturing Division.