LOS ANGELES – Two companies have teamed to thwart DVD theft using technology that renders the discs useless until activated at purchase.
The technology places a chip smaller than the head of a pin onto a DVD along with a thin coating that blocks a DVD player from reading critical information on the disc. When the customer brings the DVD to a cash register, the chip is activated and sends an electrical pulse through the coating, turning it clear.
The radio frequency identification chip, or RFID, is made by NXP Semiconductors, based in the Netherlands, and the Radio Frequency Activation, or RFA, technology, comes from Kestrel Wireless Inc., based in Emeryville.
The two companies are talking to Hollywood studios to include their chips on future DVDs and expect to announce some deals this summer, according to Kestrel Wireless chief executive Paul Atkinson.
The companies said their technology also can be used to reduce theft of other consumer products, including electric shavers, ink jet cartridges, flash memory drives and even flat-screen TV sets.
In those cases, the chips would prevent some critical element from functioning unless activated at purchase.
Retail theft of entertainment products, including video games, accounts for as much as $400 million in annual losses, according to the Entertainment Merchants Association.
The theft ranges from employee pilferage to sophisticated shoplifting rings.
Fear of theft causes many retailers to keep DVDs, games, music players and similar products behind glass cases or tagged with sensors that trigger alarms if stolen. Such measures inhibit browsing and cause delays when customers seek out a clerk to unlock a case, the EMA said.
Using technology that renders the products useless if stolen would allow retailers to display products openly, thus encouraging higher sales volume, according to Mark Fisher, vice president, strategic initiatives at the EMA.
“A heck of a lot more commerce will be had,” Fisher said. “It will also get product into a lot more outlets that are afraid of theft, including grocers.”
The technology is not hack proof, NXP and Kestrel concede. But hackers would have to open each individual package to circumvent the system, a task that would be inconvenient enough to discourage most pirates, the companies said.
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