Earlier quoted context omitted.
Both satellite piracy and creating DVD decryption software require cracking the decryption process in a sustainable way. But for getting one-time copies out, there will always be an analog output at the end of the chain. Watermarking allows the distributor to pinpoint the device used, but the only thing they can do with this information is shut down the device. I don't see how this can be an economic threat when play…
There are two things they can do with the watermark: revoke the device, and sue the person who bought it. You can't get an AT&T SIM card or a DTV smart card without a contract. The only difference between those and a DVD player is the form factor.
How hard is it to forge the required identification or bribe a store clerk to not check identification?
If someone's house is broken into, are they going to be liable for piracy through their stolen media player? (Assuming there's a several hours before it can be disabled)