Whatever HD-DVD's interpretation was is the same as Blu-Ray since they're going to use the same spec for MMC. The only deal making was the MS use to crow about Blu-ray not having adopted MMC (before either HD-DVD or Blu-ray had shipped), so the BDA changed that. All your MS talking points predate that adjustment. Hardware support on HD-DVD players is just as optional. The fact that all HD-DVD players have ethernet ports is immaterial since they still, from a hardware perspective, don't support making copies and never will. The spec still hasn't been finalized and when it does you will see a new generation of devices designed with built in storage as HD movie jukeboxes. You should also see Windows applications that will allow copies on computer systems. Theoretically, the PS3 is actually positioned to work well as a managed copy device since it is net enabled, offers expandable internal and external storage as well as potential access to NAS devices. Bottom line, by the time either were on the market all the software supported MMC but there is still no way to take advantage of it.
As you say MMC isn't actually implemented yet, but although BD uses the same technical spec for MMC as HD-DVD, there is no reason to assume the conditions for its use in the BD spec is the same. For example BD doesn't mandate an ethernet interface, HD-DVD does, so that is different for a start. There is therefore no reason why in BD the media may not allow allow veto of managed copy, even if MMC is part of the spec. The ethernet interface is for approval of the managed copy by the content provider or the content provider's proxy, so that could be another way of the content provider vetoing managed copy even if the same MMC was present on all players - ie. refusing to give permission to copy . The problem is that the studios don't trust software based controls on an open architecture like a PC.
Apparently the haggling with content providers was still going on until very recently as you will note from the date of the link I posted, and maybe is still going on. So the issue of whether 0, 1 or more managed copies will be allowed under MMC was still under discussion despite the acceptance of MMC by both BD and HD-DVD. I suspect the behind the scenes haggling with content providers might actually have been the main reason for Warner to drop HD-DVD in order to ensure BD won. I suspect the different treatment of this interpretation by the HD-DVD and BD camps was the reason why Microsoft backed HD-DVD.
The important thing to realize is that it is the hardware that actually allows or denies managed copy, so it is possible for the hardware manufacturer's interpretation of MMC to trump the content provider's - if the hardware allows copying, the content provider can't do anything about it other than keep it's content off the format. The fact is that music studios don't like selling music on CDs and would like some kind of DRMed format, but they are forced to because player manufacturers don't incorporate DRM into hardware, and software based DRM on PCs are problematic for computer users and are easily broken anyway. The only choice content providers have is to chose between the formats that are available - BD and HD-DVD in this case, and back the one which they think protects their content better.
Sony of course are not be averse to DRM based practices if it would give them a market advantage. Sony needed to allow content providers to veto managed copy initially in order to get film studio support initially. Now that BD has won the HD wars, Sony may well change it's tune (unless it is not tied in by conditions of agreements it signed) with the aim of getting the PS3 and similar devices established as the home media center, and it may actually be in Sony's interests to now push managed copy. Remember if Sony controls the BD format via it's patents, and HD-DVD isn't around, Sony is in control. Sony can use it's BD spec related patents to deny the right to manufacture BD players to any manufacturer that breaks agreements it has signed regarding the conditions set relating to relating to Sony's conditions for MMC in BD.
I think that if Sony allows no-veto managed copy on computers, it will lose to Microsoft. On the other hand if it has done a deal to allow veto of managed copy by content producers only on open computing devices like computers, but not on closed embedded players with built-in BD drives (eg. consoles and PVRs), then Sony would benefit. It is possible to easily justify this on the grounds of security against DRM cracking given the number of cracks that have already taken place. Of course that won't give Sony a monopoly, because Microsoft can introduce an XBox 360 with a built in BD drive, but it will certainly boost the PS3 compared to the XBox 360, because it can also use the BD drive for games, and the BD equipped XBox 360's price advantage would dissapear. Other BD player manufacturers would be able to do the same, producing a BD PVR type device, but the PS3 would have the advantage over them as well.
Now the above would nicely explain the reason for everything that has gone on so far - Why Bill Gates got so hot under the collar and backed HD-DVD so strongly. Why Sony kept off MMC initially and then adopted it. Why the content providers are arguing about what mandatory in MMC means, and why Warner decided to drop HD-DVD when it did.
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