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The DRM is part of the WMV codec. The DRM media required the codec supplied with WMP 10, and will not play on older versions.
The CODEC verifies your licence and IP address with a central sever, and only if they tally does the server provide the CODEC with the decryption key needed to decode the movie. As there is no way to decode the movie without the CODEC, and all other media players use the CODEC anyway - the DRM still holds.
And yes, the type of DRM on WMV HD sucks. If you've bought a WMV HD movie on DVD, you'll find out soon enough. Essentially, when you play it you must be connected to the internet (I think it does remember the code for about a week, but after that it'll have to check back with the server), and your IP must be traceable to the US. Take the disc and a laptop to Canada or to Europe, and it will not play - either you won't have a net connection, or your IP will trace back to the wrong country.[/quote]
damn, thats pretty crappy