Even if it costs $1k to get each movie release out of protected form, it's cheap for a (dubious) advertiser wishing to get a message out to a huge audience.
And further down the road, I suspect there will be an anonymous market for such content. $1k is only a penny from 100k people.
My point is, "useless" is too strong a word. It isn't silver-bullet simple, but it is a tool that can be made to work. Content providers are already costing Slysoft money; now they just have to figure out how to increase that cost fast enough to push them out of business.
But for getting one-time copies out, there will always be an analog output at the end of the chain. Watermarking allows the distributor to pinpoint the device used, but the only thing they can do with this information is shut down the device. I don't see how this can be an economic threat when player prices must be kept low for consumers, but there are millions of people wanting pirated content (which is easily distributed after extraction).
How hard is it to forge the required identification or bribe a store clerk to not check identification?
If someone's house is broken into, are they going to be liable for piracy through their stolen media player? (Assuming there's a several hours before it can be disabled)
And, with regards to "are they going to be liable", I direct your attention to the track record of the RIAA.
Of course it's hard to speculate the difficulty of such forging in the future. But I would think that $10k would be enough to break some human link in the chain.
Two simple examples:
If a license or physical player is needed to create a high-fidelity copy (for instance, by capturing raw video streams from a player), and the output video is watermarked, content providers can revoke the player. Now "free" copies cost players.
If the same technology creates a trail of evidence leading back to "pirate 0", people will start getting sued. Not everyone the RIAA sued was innocent, and there's nothing to say that the DVD legal teams will create the same PR firestorm the RIAA did by abusing the system. Just as importantly, if it takes a huge amount of effort to create a supply chain of unlawful copies, the court case is much more damaging.
Content protection is not really a practice focus for us (though anticheating and kernel protection are), so my thoughts on this are not an exhaustive summary of the space of solutions content providers have. I'm just saying, the content providers aren't always on the wrong side of computer science.