Verimatrix offers security for shows delivered over IPTV.

Byline: Mike Freeman

Apr. 13--As telephone companies worldwide roll out video over telephone lines to compete with cable TV, Hollywood studios are gearing up for a piracy battle akin to the one that rocked the music industry a few years ago.

Many telephone companies will deliver TV over digital networks using Internet Protocol -- known as IPTV. Hollywood studios tend to view the Internet as a vortex of piracy, where hackers pluck recently released movies off the network with relative ease and post them online for free -- essentially vaporizing the way studios make money.

Hoping to ride to the rescue -- so to speak -- is Verimatrix, a San Diego startup that has raised about $14.3 million in venture funding.

The privately held, 74-employee company develops content security software and forensic watermarking for video delivered over IPTV networks. Its main product encrypts movies and TV shows before they are sent over the network. It then unscrambles the video when it reaches the particular set-top box of a pay TV customer's home -- making sure the correct signal is getting to the right subscriber.

Verimatrix's watermarking technology embeds a sophisticated code into the video. …