Look at the name, they called it exactly what it was. Digital Rights Management: a system by which the rights of a user to in any way use a digital signal are managed. Whether that signal's passing from DVD player to screen, torrent file to hard drive, .avi on a CD to your college roommate, or NAS in the basement to the laptop propped up on your knees in bed; the RIAA has made it very clear that they want to (and, to a degree, have been able to) control the way the set of bits representing a work of art, that they feel they own, is used. DRM has never been about stopping pirates because that would be too limiting of a concept. Why put all this effort into stopping pirates when they can stop other small nuisances that *IAAs have probably never quite liked - things like lending DVDs to neighbours,
The biggest threat to this industry isn't the pirates, it's a population that believes that how they view content should be up to them and not dictated by a higher power. This is the mentality that allows people to justify turning to piracy when the legal route is too difficult. Rather than making the legal route easier (as the music industry seems to have figured out in only a decade or so), the MPAA is committed to creating a world where they are an altruistic god showering the people with "high-value content," asking only for our money and obedience in return. The scariest part is the thought that some of the people in control might actually believe that what they are doing is for the public good.
This hit the nail right on the head. Users feel they have the right to do what they want with what they consider "their property," whether it's that DVD they shelled out 30 bucks for, or the .avi of a free, independant movie they legally torrented from an animation studio. For some reason, organizations representing the industry (not the artists them selves) feel that in the digital age, our concept of property has to change in order for art to continue to be produced. Any rational person would beg to differ.
The worst part is that this doesn't even "close the analog hole" in any way. Sure, it stops one portion of it - recording/viewing media through component cable - but that's putting a band-aid on a chest wound. The real analog hole is the fact that, in the end, the screen is being displayed visually - it's just photons. We happen to have a method of captuing photons spread across a period of time, the video camera. Sure, it'll look crappy at first, but people will get better at normalizing the colours or finding different capture methods, and, as has been seen before, users will adapt to the worse quality format because it's the one that's not fleecing them.
Personally, I'm keeping my older equipment until stores eventually realize that trying to redefine the legel definition of property outisde of the court system turns more customers away than pirates it keeps at bay - which, last time I checked, was virtually nil.