HDCP stands for High-Bandwidth Digital Content Protection. It was developed by Intel subsidiary, Digital Content Protection, LLC, and its main focus is to stop the unencrypted transmission of high definition video content from a source like a Blu-ray or HD DVD player and a display monitor / TV set. HDCP is used with the Digital Video Interface (DVI), DisplayPort and High Definition Multimedia Interface (HDMI)
HDCP is required for all equipment that use a HDMI connection. Since HDCP is a proprietary technology, it requires a license to be implemented and as part of the license agreement, a manufacturer must agree to limit the capabilities of the other video outputs on a device. This means that in effect, a movie disc can instruct a source player to downgrade the video quality if a user attempts to transmit high definition video content through a connection that doesn't feature HDCP.
This downgrade is typically the conversion of a HD video back to standard definition video. It is also possible that HD content could be completely blocked from transmission through non-HDCP connections.
How it works
When a source device (i.e. Blu-ray player) is preparing to transmit protected HD video content to a display monitor through an interface that supports HDCP (i.e. HDMI, DVI), first the devices must initiate a "handshake". During this, a special key known as a Key Selection Vector is exchanged. The KSV is made up from 40 unique keys that every HDCP device has. During this process the Keys and KSV's are generated in a way that ensures each device gets the same 56 bit number which is used in the encryption process.
A XOR operation is then applied to encrypt each decoded pixel with a 24-bit number. To ensure security of transmission, keys are constantly updated.
Revocation and hacking
Each HDCP device includes 40 unique keys which make up the KSV used in the "handshake" between devices so that encryption and transmission of the video content can begin. If a device is found to have been compromised, then to protect content, a "revocation" list that can be included on a movie disc for example, will include the keys that have been revoked from a hacked device.
So if a display device has been compromised, a source HD DVD player may find when KSVs are exchanged that it is part of the revocation list and will not send HD data to it; instead either transmitting standard definition video or no video at all. This method to protect content is frowned upon by experts since essentially it means any product from any electronics company that uses HDCP, could in future be compromised then "revoked", making it useless for some future releases of HD video.
Flaws have been reported with HDCP. One cryptographer, Niels Ferguson, claims to have broken the HDCP scheme but never published his work citing worries about consequences under the Digital Millennium Copyright Act (DMCA).
Why HDCP is needed?
HDCP is being used to prevent "eavesdropping" and copying of content while it travels between a source device and a receiver. Since the utter failure of all forms of content protection associated with the DVD-Video format, Hollywood studios are looking for more serious content protection. HDCP is only used when the source content is copyright protected, and does not affect unprotected content.