Source: "The legislation came about because Hollywood studios and directors had sued to stop the manufacture and distribution of such electronic devices for DVD players. The movies' creators had argued that changing the content even when it is considered offensive would violate their copyrights."
I can see hollywood's point. The Hollywood studios are not really trying to fill you house with smut, if you do you want it. They are just trying to stop a dangerous precedent (or what they think is a dangerous precedent) from being put into place. That is the downside for them, but they fail to see the upside.
There are some positive effects for Hollywood if they allow this technology. Whenever the religious right brings up the smut they produce, all they have to do is point to filter technology like this. That would put the responsibility of making sure the smut does not reach the kids on the parents where it belongs and allows Hollywood to make what every type of movies they see fit.
"Critics of the bill have argued it was aimed at helping one company, Utah-based ClearPlay Inc., whose technology is used in some DVD players. ClearPlay sells filters for hundreds of movies that can be added to such DVD players for $4.95 each month. Hollywood executives maintain that ClearPlay should pay them licensing fees for altering their creative efforts."
There is only one company now probably because they patented the technology and also because you are trying to sue them out of existence. Other investors are probably hesitant to enter the market. The fact is that ClearPlay is not altering anything, they are just filtering it. I could do the exact same thing if I fingers were quick enough on the remote, but thanks to technology I do not have to. Does the local water utility sue me if I run their water through a filter before I drink it?
Though Hollywood might have a case against these people.
"Unlike ClearPlay, some other companies produce edited DVD copies of popular movies and sell them directly to consumers."