According to Arstechnica, "The latest attack vector bypasses the encryption performed by the Device Keys—the same keys that were revoked by the WinDVD update—and the so-called "Host Private Key," which as yet has not been found. This was accomplished by de-soldering the HD DVD drive's firmware chip, reading its contents, and then patching it. Once that was done, the firmware was soldered back onto the drive."
Although performing the hack is technically difficult, "arnezami", a hacker who has been at the center of AACS cracking says its unstoppable. "They cannot revoke this hack...No matter how many Private Host Keys they revoke we will still be able to get Volume IDs using patched xbox 360 HD DVD drives."
"Arnezami" also believes the hack will make future decryption easier: "This hack/technique enables us to figure out how the Volume ID is stored on the disc," arnezami explained. "It's very possible we would figure out [...] how the KCD is stored on the disc. Knowing that and being able to teach a PC drive how to read a KCD will open the door for what I called third-generation decryption."
Although "third generation decryption" is not a reality yet, when the cost of standalone HD-DVD players fall in price, the decryption will become a reality.
And so, with this latest crack, the battle wages on between hackers and content providers.
Source:
Arstechnica