Real looks like it will have a big hit on its hands with RealDVD if consumer interest matches the media interest I saw in the product at Pepcom’s Holiday Spectacular (PDF link) show last night. The table was so crowded that it wasn’t until the booths were being torn down that I had a chance to catch up with Real corporate communications VP Bill Hankes, who  kindly took a few minutes to talk about the software with me after we both explained that we weren’t lawyers.

As Dave Zatz has reported, Real has a license from the DVD Copy Control Association, but I’ve countered that simply having the license, as Kaleidescape did, is not a guarantee of the legality. Bill said that Real believes RealDVD is legal because it preserves CSS and layers more encryption on top of it (that said, I seem to recall Kaleidescape employs some pretty serious encryption as well and of course its solution is a closed box) and that the usage that RealDVD allows falls under fair use. Although, again, the scenarios that Real envisions for RealDVD (streaming around the house, etc.) sound very similar to what Kaleidescape allows. .

Regardless of the letter of the law, the key question is whether Real can avoid a legal challenge by the studios. Bill admits that the studios are concerned about the product, but says that Real is having productive discussions with them about some of the opportunities it affords them (such as introducing fresh trailers a la BD-Live) in an age where DVD sales are flat.