"Huh?" you ask. The effect of the downconversion is that HDTVs whose only HD-compatible inputs are component video or analog RGB, including thousands of HDTVs sold before digital DVI and HDMI inputs were available, will not be able to display the full resolution that next-gen players offer. People who bought those HDTVs won't see nearly the full picture detail that they would otherwise.
Under the finalized version of AACS, studios can elect whether to engage a "flag" in the disc that tells the player to allow or disallow full-resolution analog signals. According to an excellent summary of the decision from Video Business (via Dark Horizons), no studio has yet stated whether it plans to take advantage of the downconversion option. According to unnamed sources in the article, Warner Brothers has been the strongest proponent of the system, and Disney, NBC Universal, and Paramount are also likely to take advantage of it. Other sources said that it's unclear whether Sony Pictures would take advantage, while Fox has been an opponent of the system. Studios will be required to state on the disc's packing material whether downconversion will be forced for that particular title.
Other interesting notes from the Video Business story:
- Proponents of downconversion argue that people have a hard time telling the difference between downconverted and true HD resolutions in the first place.
- They also say that since many HDTVs have limited native resolution anyway, the downconverted resolution isn't that bad. For example, if you own an EDTV plasma, you won't miss the lost resolution.
- Players will still have the capability to upconvert the downconverted output to 720p or 1080i. There's no way to reclaim the lost picture detail, however.