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Something I've never understood about DRM is, if the content is ultimately played on my device, what stops me from reverse engineering their code to make an alternative client or downloader? Is it just making it harder to do so? Or is there a theoretical limit to reverse engineering that I'm not getting? Do they have hardware decryption keys in every monitor, inside the LCD controller chip?

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in short and simple terms, those parasites colluded with hardware manufacturers and put a special chip in your computer and monitor that runs enslavement software

without opening it up physically there is no way to make it stop or get the raw stream before it's displayed

This. Some ways back I actually purchased bluray recording device only to learn that its firmware is deliberately crippled to accommodate someone's business model. There are people who do the unsung hero work, but those types of skills are not exactly common and a business asshole is a dime a dozen any century you want to pick.

Yes, the decryption happens in hardware. For your OS (and potential capturing software running on it) the place where you see the video is just an empty canvas on which the hardware renders the decrypted image.

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