I'm all for intellectual property (and I hope some day to have some,) but it seems to me that movie studios, like the music business before them, are responding in the worst possible way to the current threats to existing modes of media distribution posed by the Internet and digital recording technology. Computer wizards will always find ways around DVD watermarking or anti-piracy technology, just as our usual criminal elements will continue to traffic in any money-making opportunities they can create.
My suggestion, (and I'm available to consult or provide, for a price, written commentary on this) is that movie studios immediately embrace this new method of distribution. After all, what are the studios really selling? Is it an oft-told tale? A particular fashion or style? A group of consumer products portrayed in the film? A pretty face within the star system?
Just as Marshall McLuhan in the 1960's informed GE that they were in the "information" not the "light bulb" business; I would tell the movie studios that they aren't really selling a particular movie. They are primarily selling a way of seeing the world and being in the world, and coincidentally, a group of products that represent that viewpoint and that lifestyle.
The movie studios are too hung up on the story content, which, if surviving manuscripts are any guide, hasn't changed all that much since prehistoric times. They are also blinded by the incredible rewards of the existing distribution system, where they are the few gatekeepers to an entire medium. The digital age has done away with this celluloid oligopoly.
How do the movie studios embrace the new digital distribution environment? They may have to abandon the blockbuster mentality as a means for supporting their other creative misjudgments. Smaller returns for smaller projects mean smaller risk, but also smaller incentives to pirates and hackers.
Just as cable has created niche television, movie studios should explore the profit potential of niche cinema distributed digitally. YouTube anyone? Big budget movies won't disappear overnight, but the lesson of the recent history of the music industry is that consumers want to be producers, that there is a huge pent-up demand that cheap recording and editing technology is addressing, and that the coming change cannot be contained by stronger constraints, whether technological or legal.
The Internet is now determining our media biases. Intellectual property, copyright legalisms and print-based exclusivity will soon be a fond relict of the past. Movie studios can embrace this new digital paradigm or they can continue to resist it, at their peril.