Press Release
Source: Cryptography Research, Inc.

Cryptography Expert Paul Kocher Warns: Future DVDs Prime Target for Piracy,
Pay TV Foreshadows Challenges
Tuesday April 20, 12:07 pm ET

LAS VEGAS, NAB 2004, April 20 /PRNewswire/ -- Movie piracy today is still
immature in the United States, but as available storage space and bandwidth
increase, so will the motivation and sophistication of movie pirates, warns
security expert Paul Kocher, president and chief scientist of Cryptography
Research, Inc. Kocher believes that future optical media formats -- the
successors to today's DVD -- will require dramatically advanced content
protection technology and enforcement measures just to keep up with the
better-funded and more-determined adversary of tomorrow.


Kocher believes the current pay television piracy can be seen as a
harbinger of things to come for optical media. "Movies are still difficult
enough to copy, so that for most people, it isn't worth the hassle," he
said. In the United States today, the movie industry is primarily chasing
mischievous college students, internal leakage and low-quality analog
recordings as the sources of piracy, according to Kocher. "By contrast, in
the pay television industry, we routinely face well-funded, technically
sophisticated pirates, many of whom are closely connected with organized
crime networks. It's ultimately a question of whether people perceive
piracy to be worthwhile," he said.

Kocher believes the very thing that makes successors to DVD more attractive
to consumers -- high-definition content -- will also make them more
attractive to pirates. Although the larger file size of new high-quality
optical media formats like Blu-ray or HD-DVD movies will slow many pirate
efforts by perhaps two years, high-definition content is a much more
attractive target for attackers because, in many cases, it represents the
best quality studios have to offer.

"While it's unfortunate that security on the current DVD format is broken
and can't be reprogrammed, HD is what really matters. Once studios release
high-definition content, there will be little or no distinction between
studio-quality and consumer-quality," said Kocher. "This means that HD is
probably Hollywood's one and only chance to get security right."

According to Kocher, Hollywood is following a path common to other
industries facing similar problems. "Typically, first-generation security
systems fail irrecoverably, but later generations are designed to recover
from failures," Kocher said. As an example, he cites K-band ("big dish")
satellite TV systems, which suffered from devastating piracy because
security flaws could not be corrected. Having learned this lesson, modern
pay TV systems place critical security components in smart cards or
security modules that can be replaced. While this approach is not optimal
because hardware upgrades are expensive, it has enabled the industry to
keep piracy at survivable levels.

For movie studios, optical media has so far followed a parallel path. The
content protection system for DVDs was designed without renewable security,
and has now been broken irrecoverably. "Just as the transition to digital
broadcasts provided satellite providers with the opportunity to change to a
better approach for security, new format initiatives such as Blu-ray and
HD-DVD present an opportunity for the optical media industry to correct its
dysfunctional security architecture," Kocher said.

"The problem is urgent because it takes several years for security efforts
to pay off. Everybody's worst fear is that Hollywood will follow in the
music industry's steps and fail to make progress due to political
maneuvering and a lack of technical leadership," said Kocher. "On the other
hand, if security decisions reflect a disciplined analysis of the long-term
business requirements, I still think it is possible to keep piracy at a
manageable level. Even in the best case, though, things are going to get
much worse before they get better."

About Paul Kocher

Paul Kocher has gained an international reputation for his work in the
field of cryptography. Kocher has designed and co-authored many
cryptographic applications and protocols, including SSL v3.0. At
Cryptography Research, he leads a team of scientists and engineers who
specialize in developing technology to help solve real-world data security
problems. Research efforts he directed include successfully building the
record-breaking DES Key Search machine, discovering Differential Power
Analysis, and developing technologies that are used widely to secure pay
television systems and smart cards against attack.

About Cryptography Research, Inc.

Cryptography Research, Inc. provides technology and services to solve
complex security problems. In addition to security evaluation and applied
engineering work, CRI is actively involved in long-term research in areas
including tamper resistance, content protection, network security, and
financial services. This year, security systems designed by Cryptography
Research engineers will protect more than $60 billion of commerce for
wireless, telecommunications, financial, digital pay television, and
Internet industries. For additional information or to arrange a
consultation with a member of the technical staff, contact Jennifer Craft
at 415-397-0329 or visit www.cryptography.com.

Cryptography Research is exhibiting at Booth SU7779 at the National
Association of Broadcaster's annual conference, NAB 2004, April 17-22 in
Las Vegas.

 Source: Cryptography Research, Inc.

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