Hundreds of billions of dollars and the future of dozens of promising digital entertainment markets are at risk unless concerned companies and industries can resolve their differences over Digital Rights Management (DRM) and Conditional Access (CA), iSuppli Corp. is warning.

DRM and CA reside at the convergence point where content providers, service carriers and platform makers are aligning to develop digital entertainment. They play a key role in the development and growth of digital content for both home-entertainment and mobile-multimedia platforms, impacting areas including digital music, broadband video, mobile TV, high-definition DVD, Internet Protocol Television (IPTV) and home networking. Because of this, DRM and CA will determine the future of the digital-content business, depending upon their degree of success.

However, disagreements between the concerned companies and industries over how DRM and CA should be implemented are hampering the growth of these markets, according to Mark Kirstein, vice president of multimedia content and services for iSuppli.

Kirstein’s new DRM whitepaper, entitled Digital Rights Management and Conditional Access: Keys to the Digital Content Kingdom, is being made freely available to promote understanding of the challenges and opportunities of DRM/CA.

"When it comes to DRM and CA, conflicting interests abound, both among industries and among companies," Kirstein observed. "Each industry has its own standards associations and trade groups, which have spurred an array of various incompatible standards and DRM-related proposals. The diversity of interests in DRM has resulted in a competitive deadlock regarding interoperability."

This impasse has major implications for both companies and consumers, according to Kirstein. Enabling content portability and interoperability is a central proposition for media home networking and supporting connected mobile devices.

“Lack of DRM interoperability is emerging as a major issue that will continue to grow in importance as digital media markets expand. Indeed, the industry's vision of enabling all digital content to be played on any device in any location is at risk due to DRM interoperability issues.” Kirstein noted.

DRM defined
The terms DRM and CA often are used interchangeably. Even within the industry, the distinctions are blurred. However, iSuppli distinguishes the two technologies in this fashion:

• CA refers to controlling consumer access to content on a service provider network. It protects the pipe and prevents theft of service. It does not define what happens to content once delivered to user.
• DRM traditionally was focused on protecting the content itself. It grew out of the Internet where the pipe was unprotected, so the content had to be encrypted. DRM also features a more complex set of rights, and defines permissible uses. DRM and CA are coming together in the newer markets of IPTV and content for mobile handsets. The term DRM is defining the superset of content protection, including CA, content protection and content rights.

DRM and CA outlook
Overall, the market for DRM/CA in networked and mobile applications amounted to nearly $1.5 billion in 2005, according to iSuppli. Traditional CA technologies deployed on cable and digital satellite television networks represent the bulk of the current market.

iSuppli forecasts the overall market for DRM/CA across all segments will grow to more than $4.7 billion by 2010. The strongest growth will be in the IPTV and mobile-phone segments. However, the opportunity is widespread across set-top box, portable media player, satellite radio and other platforms and services. The figure below and attached presents iSuppli’s worldwide DRM/CA forecast.

The impacts
DRM/CA’s success will have implications far beyond the revenue they themselves generate.

“DRM is more than just a market barrier for digital media and the underlying equipment markets,” Kirstein said. “DRM also represents one of the most strategic and competitive technologies, influencing the competitive landscape and whom will be winners and losers. DRM’s role as arbitrator of business models and revenue flow positions it as a key element determining cash flow for service providers and content owners.

An example of the strategic implications of DRM can be seen with Apple Computer Inc.’s proprietary Fairplay DRM for its iTunes music service, which it largely does not license to third parties, Kirstein noted. This lack of licensing both restricts interoperability and locks the customer into the iPod/iTunes platform.

“This is good for Apple for now, because it keeps customers in the fold, and it gives the company a distinct edge versus competitors. However, using a proprietary DRM raises the risk of undermining the long-term customer experience and inhibiting the broader market.”

iSuppli releases DRM whitepaper based on its new Research Report
The whitepaper provides insights on key issues shaping the future of entertainment content, including:

• The outlook for DRM/CA in specific products, including set-top boxes, IPTVs and mobile phones.
• Regional outlooks for DRM/CA.
• The role of various industries, from Hollywood studios to electronics OEMs, in the development of the DRM/CA industry.

The whitepaper is based on iSuppli’s new DRM research report, Digital Rights Management and Conditional Access: Keys to the Digital Content Kingdom.

For a free copy of the whitepaper, visit iSuppli’s website at http://www.isuppli.com/whitepapers .