Mike Weston's semi-rant on blue laser DVDs and related issues is worth a read. Snippets:
Digital watermarking is something they call a ROM Mark. It really only applies to the pre-recorded media you buy -- movies, music and games. Don't worry about it because they say you'll never even know it is there. It was used in today's DVD technology but you could easily defeat it just by writing over it with a permanent marker.
Both sides like Advanced Access Control System (AACS) which requires your player to maintain connections to the content provider through the Internet. If your disc doesn't pass their security check it isn't a big thing. The provider will simply send your player a "self-destruct code" ROM update that will blow up your player. Okay, so it won't physically blow up. You simply won't be able to use it until a repair technician reprograms the player. And your entire library of discs that may have been encoded with the broken security may be unplayable also.
That is so cool !!!
Just in case you get past these two hurdles, they've added a third. This is a renewability method that lets content providers implement dynamic updates of compromised code. This is an advanced form of CSS (content scramble system that they used before which was defeated within hours after it was released) and is called SPDC. Simply stated, every time someone cracks the code the encryption algorithm will "learn from its mistakes" and improve the code. That's a challenge no hacker can refuse!