This is a neat summary of an idea that always turns up on every DRM thread. If the best way to copy a movie is to buy some extra hardware to plug into your VGA port, and then play the movie back at regular speed while you record it, then DRM is working. Joe Bloggs isn't going to do that to give his mates copies of a movie he enjoyed.
Of course, someone out there will go through that and put it on the internet. But Joe's mate is worried that the government will track his downloads, or his computer will get a virus from these dodgy downloads. And every few weeks, the source he's using shuts down and he has to find a new one. Before long, he'll just decide it's worth giving Netflix a few dollars a month to get movies the easy way.
Most piracy isn't about Joe Bloggs giving the video to his friends. It's established institutions uploading videos to popular torrent sites, where they get millions of downloads. There is simply no way to prevent that.
Piracy isn't about Joe giving the video to his friends precisely because of DRM. If it was trivial to click 'save as' and copy the movie to a memory stick, I think people would be swapping movies routinely.
I already outlined precisely how they limit the influence of illegal download sites: ensure that the effort to find them and the perceived risk of prosecution and malware exceeds the cost of getting the movie legally. Once people start working and appreciate the value of their time, it's not actually very hard to tip that equation in their favour.
Of course, someone out there will go through that and put it on the internet. But Joe's mate is worried that the government will track his downloads, or his computer will get a virus from these dodgy downloads. And every few weeks, the source he's using shuts down and he has to find a new one. Before long, he'll just decide it's worth giving Netflix a few dollars a month to get movies the easy way.