Remember the "analog hole" that copyright owners complained about? The idea was that a VHS tape or DVD's content could be copied by simply taking the composite or S-video analog output from the player, and instead of attaching it to a TV for viewing, it could be attached to a VCR with recordable tape, or other recording device (like a PC with analog video capture card). This would allow people to pirate the content, even from DVDs without worrying about cracking encryption, because the already decoded analog video output signal is what would be being recorded.
With digital video data, this is much easier to prevent pirating of. A Bluray player with HDMI output, when playing a protected Bluray disk, will output an encrypted version of the digital video data, which will be decrypted in the TV itself, and furthermore it will contain digital data that mark it as not to be copied. Manufacturers of HDMI input devices (like a PC with digital video capture card), must meet the specifications for such devices. That is if it is intended to record digital video data, it MUST honor the copyright marker data in the video stream, and refuse to record the stream. If it doesn't, then the manufacturer will be denied access to the specs needed to manufacture the device, preventing it from ever being built. Furthermore, any digital to analog converter that is manufactured must reduce the quality of both the video and audio analog outputs for any stream with a copyprotection data flag, so as to make sure that it is even lower quality than normal standard definition video and audio (so even lower quality than ripping an analog standard-def 480i DVD of the movie).
That seems like a 100% foolproof solution. But I realized that there is one thing they overlooked when coming up with this digital video protection scheme. Many computers have HDMI video outputs now (rather than just the old 15pin RGB analog video connectors). Because the image displayed on a computer screen at any given moment, isn't neccesarily copyrighted, the computer's HDMI output is not encrypted, and does not have a "don't copy" data flag in the video stream. As such, a second computer, equipped with an HDMI input card and video recording software, can record the digital video stream coming out of the HDMI output port of the first computer. If that first computer has a Bluray drive in it, it can play movies, and in this configuration, it just so happens that the video output of the computer contains copyrighted imagery. And because the HDMI output port of a computer doesn't output an encrypted or protected digital video stream, nothing in HDMI output of the first computer has no way of alerting the second computer with an HDMI input card, that the video stream contains any copyrighted imagery. The second computer with its HDMI input card will not care if the video coming out of the first computer is me typing "hello world" in Notepad, or if it's playing a copy of Wreck it Ralph in 1080p. Whatever video coming out of the first computer that would normally show on a computer monitor, will instead be recorded by the second computer.
That's what I call the "digital hole".