Hollywood should face up to the fact that the only way they will get consumers to buy digital television with broadcast flag DRM is through Congressional mandate. They may get that mandate, but it sure will tick off consumers (who also happen to be voters).
I would be willing to bet that this new device developed in Japan (or something similar) will be selling more than digital televisions with DRM by 2006, when the transition is to take place (New foam/home networks tile 'Play@tv' [Babelfish Translation from original Japanese]). This wonderful device connects to your computer and provides a wireless or ethernet connection to your television. You will be able to watch video stored on your computer's hard drive on a television in another room (a not uncommon arrangement). Additionally, you control what is played via a handy remote control. It isn't clear if you would be able to record from the television to the computer as well, but there is no technical reason I am aware of that would prohibit the addition of such a capability [via Gizmodo].
Combine the above with one of the new computers specially set up for multimedia such as (Yuclid Digital Media Console) and you've got a killer hardware/software app. Computers are great, but you want them in the home office or den for surfing, email, blogging, etc. This is why WebTV was a failure. Televisions are generally set up to be social devices and using a computer is not generally a social activity. On the other hand, computers today have oodles and oodles of excess processor and hard drive capacity. Why pay for an ungradeable box in the living room from a company that wants to charge you to view your photos (TiVo: One Step Forward One Step Back) when you can use your perfectly serviceable computer? [also via Gizmodo]
Computers are converging with television. This is the real digital television revolution (LawMeme Submits Its Thoughts on the Broadcast Flag). The FCC can attempt to prevent this at their peril.