High-Tech Solution Catches Old-School DVD Thieves

MANHASSET, N.Y. — DVD counterfeiting and piracy cost content creators and disk sellers billions a year in lost revenues. But even as the industry scrambles to get a step ahead of the digital thieves, a low-tech form of larceny—the snatching of packaged DVDs from stores, warehouses and other points along the supply chain—continues to yield losses "on the same order of magnitude," said Paul Atkinson, President and CEO at Kestrel Wireless (Emeryville, Calif.)

Indeed, Atkinson said, "10 to 15 percent of the disks—especially newly released films—shipped [annually] in the United States are believed to be stolen."

To combat the problem, NXP Semiconductors and Kestrel Wireless have developed an antitheft mechanism for DVDs. NXP provided the system's RFID chip; Kestrel contributed a security framework called Radio Frequency Activation (RFA).

Under the system, the DVD manufacturer would overlay each disk with a thin electro-optic layer, conceived by Kestrel. Atkins said the layer functions "like a shutter," barring a DVD player's laser from reading the disk. An RFID inlay comprising the RFID chip and an RF antenna is embedded in the disk.

DVD disks incorporating the mechanism would remain unreadable until passed through an RFID reader at the point of purchase. The reader would check a unique number embedded in the disk's RFID chip to confirm the sale. The RFID chip on the DVD would then power up, creating a short electric impulse that would change the optical behavior of the disk's electro-optic film layer and make the layer transparent. Any DVD player could then read the disk.

The passive RFID requires no internal power supply. A very small electrical current induced in the antenna by the incoming RF signal yields just enough juice to let the RFID chip power up and transmit a response.

Looking beyond the initial application in optical disks, Jan-Willem Reynaerts, general manager of the RFID market sector team at NXP, said the mechanism might have utility in such other consumer electronics products as MP3 players and flat-screen TVs.

Since the system's RFID chip integrates extra logic and nonvolatile memory for data storage, Kestrel's Atkinson said, it could easily accommodate such functions as "flipping a switch to disable the power of an MP3 player" before the product is shipped.

Meanwhile, NXP, a leading promoter of near-field communication technology, is betting that RFID-enabled optical disks will boost NFC's penetration. Optical disks can use either high-frequency (13.56-MHz) or ultrahigh-frequency (915-MHz) RFID inlays. NFC technology taps short-range HF RFID tags. Reynaerts said consumers might one day use an NFC-capable mobile phone to purchase antitheft-enabled DVDs integrated with HF RFID inlays.

Under that scenario, he said, a consumer might receive a promotional pack of 10 DVD disks from a service provider and decide to watch only three of the films. The consumer would use an NFC-enabled mobile phone as a scanner to activate the selected disks and would return the rest.

The optical-media solution will enter "advance trials" in mid-2007, said Reynaerts, and is expected to appear in commercial optical disks before the year is out.

The question for DVD makers and retailers is whether the benefits of the security mechanism will justify the added costs for the chip, the electro-optic layer and the licensing fees associated with Kestrel's RFA framework. Neither Atkinson nor Reynaerts would quantify the costs or disclose other terms and conditions, but both noted that DVD players themselves would require no modifications to play the disks.

They also noted that today's disk packages are designed to be difficult to open and that retailers often display only empty disk packages on their shelves, keeping the disks behind the counter to discourage theft. With the new mechanism, packaging and stocking of disks could be simplified. That alone, Reynaerts said, could offset the mechanism's cost.

There is an additional advantage, he said. Retailers sometimes wind up with overstocks when titles don't meet sales expectations. When those overstocked disks are returned, "they often end up in a 'gray' channel," Reynaerts said. The RFID/RFA mechanism could help keep overstocks off the gray market because they would not be readable.