Less than a day after I pooh-poohed announcements made by Google’s general counsel about supposed steps the company is taking to enhance copyright enforcement over its services, Google announced a deal to acquire Widevine Technologies, one of the last remaining independent DRM vendors. The price was undisclosed, although Widevine has accrued investments well into the tens of millions of dollars from such companies as Samsung, Cisco, Liberty Global, and EchoStar.
I had known of other companies potentially interested in acquiring Widevine, but Google was never one of them. Yet there are at least three reasons why Google might be interested in owning Widevine. The most obvious, and the one cited by most other pundits, is Google’s need to implement DRM technology that will make Hollywood studios comfortable in licensing content to Google TV. Google TV has not had the warmest of critical receptions since its recent launch, so Google may be thinking that they can’t do without licensed “premium” content after all.
Acquiring a company seems like an overly elaborate way to obtain studio-approved DRM — and indeed, Widevine is on all of the major studios’ approved lists as well as that of the DECE/UltraViolet consortium. Google could have simply licensed Widevine’s technology, as many cable, satellite, and Internet video distributors have already done. Google does have a predilection for developing and owning technologies rather than licensing them from third parties. Yet Google is undoubtedly aware of the difficulties in getting studio approval for content protection technology that isn’t already on their approved lists. Therefore acquisition does seem to be a better alternative than licensing, at least from Google’s perspective.
The second possible reason for the deal has to do with Widevine’s strategic alignment with companies that could complement Google and improve its positioning against competitors in the emerging Internet video space, such as Apple, Amazon, Adobe, and Microsoft. Widevine’s DRM, unlike Apple’s FairPlay or Microsoft’s PlayReady, is supported on a very broad range of consumer devices, from handsets to set-top boxes to PCs. It’s also part of the CinemaNow/Best Buy ecosystem, which would give Google a retail presence to rival Apple’s.
Finally, Widevine offers adaptive streaming video technology that competes with similar technologies from Adobe (which Amazon uses), Apple, and Microsoft. This could be a useful piece of the puzzle for Android and Chrome OS, as well as for Google TV, since TV watchers are naturally less tolerant of “rebuffering” than, say, YouTube watchers. Furthermore, Widevine holds patents covering combinations of adaptive streaming and stream encryption.
In any case, when this deal closes, Google will be unequivocally in the DRM business. It will no longer be able to pretend that it isn’t, even though Google’s e-book technology includes a form of “DRM” by presenting e-books as hard-to-reproduce page images on web pages instead of downloadable files. Google will have to support Widevine’s existing customer base and possibly continue to sell the technology to various types of network operators.
Now that — unlike the relatively inconsequential pronouncements of Google’s GC last Thursday — is a seismic shift in Google’s attitude towards copyright protection and DRM.
Copyright and Technology 
Great news! Great for the industry as a whole!
Interesting move. If anything, this is worse news then the over hyped HTML5 against Adobe Flash.
Adobe can fight back.
See the details in my post on this at
http://www.crafted.com.au/blog/2010/12/06/googles-goes-drm-adobe-flash-is-not-is-real-trouble/
James
Well written article. Expanding upon your second point about Widevine’s integration with distribution partners (including IPTV partners), could this development also expand GoogleTV as a middleware platform? This is the question I looked at in my post, Google’s Acquisition of Widevine – A Boon for IPTV Operators?
Thanks for your note. However, it’s hard to answer your question.
When a relatively small fish gets swallowed by a blue whale, you never know what’s going to happen with the small fish’s assets. I’ve seen cases over and over where startup X gets acquired by big fish Y and then gets buried deeply within the Y bureaucracy, the management team is reassigned, and X is hardly ever heard from again. Then there the acquisitions that Sun Micro used to do (when I worked there in the late 90s) which were “hey, there are these 5 smart guys in a garage doing something-or-other. Let’s buy out their little company so that we can get these 5 smart guys to work on something different.”
I’m trying to talk to Brian Baker at Widevine about this, but
a) I’m under NDA with Widevine so I have to be careful about respecting that here, and
b) Brian himself may not have a 100% complete picture of what’s going to happen with his company’s technology under Google (this is normal, not a fault on Brian).
– bill.
This deal makes little sense.
At best, Google had viable alternatives to every benefit Widevine could offer which should have depressed the transaction price; at worst, Google made an acquisition that will have negligible impact on Google TV.
This was not a DRM acquisition. Google does not/should not want to be in the DRM business, and be in the odd position of supporting competitors like Boxee.
If this was an adaptive bit rate technology acquisition, (whiche Google needs for its Android and Chrome platforms), why is Widevine the best pick? If Google is looking to compete vs. Adobe/Apple/MSFT, companies like Inlet and Vidiator have more deployment credentials… as well as emerging support for Google’s WebM proposition.
Yoav,
You should little understanding of the political landscape of Western US and the media Gatekeepers.
This is as much a political move as a technology move.
Google was hoping the GoogleTV platform would kick of direct producer to consumer models with Google advertising $$ feeding the model.
Even I know that was over zealous. (At this stage)
As such, Google now has to start playing THEIR game. And THEY insist on DRM being part of the implementation.
As some one who has worked in Media and technology for all my life.
I don;t blame them. And to a degree, agree with them.
You don;t put on a payed outdoor festival without at least a wast high fence around it. It will not stop people jumping it but generally makes them PAY for the event.
DRM is becoming just that. How high that fence is is not the point. The point is that there IS a fence.
James
James is right. Regardless of whether you think DRM works (or whether you think Google thinks DRM works), it’s well known to be a precondition of getting licensing deals, along with various other common preconditions such as paying cash advances against revenues and so on.
So, as I said, Google had three choices: use an off-the-shelf DRM, build its own, or acquire one. The latter is the most reasonable (or maybe least objectionable) option. Hollywood is just not going to allow its content to be used without approved DRM — especially by a company with which it is currently at war (in court).
Bill/James:
Agreed that DRM is critical (perhaps not Widevine’s), I just don’t think that the acquisition was about getting a DRM to improve Google TV (nor do I think it will achieve that result). Even if it was the least objectionable option or cheapest way to get DRM.
Possible that integrating DRM could counter Android fragmentation to enable multi-device delivery (if Google can reconcile its open platform with Widevine’s proprietary tech). But that’s less about protecting content to gain rights and more about making it easier for content to be securely accessed on various devices (i.e., Netflix streams to Android, etc.)
BTW – James, perhaps you should ask Irdeto/Cloakware how high the DRM fence needs to be…
If you “ask Irdeto/Cloakware how high the DRM fence needs to be”, you will get a rather biased answer. It would be tantamount to asking Ingersoll-Rand (makers of the Kryptonite Lock) how strong a lock you need to protect your bike from theft. Or asking Monster Cable how fancy a wire you need to transmit analog audio from your stereo to your speakers.
The “DRM bargain” between the tech and Hollywood is based on a back room deal between the two industries known as the DMCA. The deal is this: the tech industry gets to build DRM locks without really having to be responsible that they actually work; Hollywood (knowing full well that no DRM is totally hack-proof) gets a law that imposes criminal liability on hackers, as opposed to the DRM technology makers. This assessment of DMCA 1201 was made into settled law in the appeals court opinion in Universal v. Remeirdes (2000).
So, the free market being what it is, Hollywood invented something called DRM Robustness Rules, which technologies companies and service providers are required to follow when implementing DRM. Robustness Rules have to do with what happens “around” the DRM – how it is implemented, how software is tamper-proofed, how encryption keys are hidden, and so on. To get a license to content, you not only have to use a studio-approved DRM technology but you also have to agree in your license agreement to abide by robustness rules, and in some cases, to submit to audits.
That’s where Cloakware comes in. Cloakware helps device makers and service providers satisfy Robustness Rules. They’ll tell you (truthfully) that they do more than that – they help secure software that could be in the best interests of the service providers themselves, as opposed to the content owners – but that’s their basic business, and they’ve done well with it.
So, Robustness Rules do what the DMCA failed to do: to impose some sort of legal liability (contractual, not statutory) on tech companies that implement cheap & dirty DRM. Cloakware and one or two competitors, such as Arxan, have capitalized on this and made it effectively part of the cost of DRM implementation. If Google implements Widevine DRM in Google TV or other services, they will find this out if they don’t know it already.
Bill,
Appreciate the insight into the DRM backrooms and the exchange.
I still question how Google benefits by entering the “cheap and dirty” DRM world, but time will tell; I wish the new emperor well with these new clothes…
machines a sous barriere en ligne
Google Acquires Widevine | Copyright and Technology