Earlier this month, we reported that the AACS LA had unveiled the final version of its copy protection system which included watermarking and encrypted keys. ABI Research has now issued a report stating that high-def players may require some hardware modifications to support this new technology.
Furthermore, new watermarking techniques are being implemented that may require enhancements to high-definition DVD hardware platforms. ABI Research sees a high likelihood for the incorporation of these changes, among others. “The watermarking process tags audio content in such a way that analog copies will be rejected by the player,” adds Wilson. “Content owners could unobtrusively tag their original source material and facilitate source detection of pirated material.” Watermarking is already in use in theatre content source.
Unless the AACS LA is going to require that players support these technologies, I don't think too many consumers are going to care that their player won't prevent the playback of watermarked content. If you'd like to read more, the entire report can be found here.