HDCP stands for High-bandwidth Digital Content Protection. HDCP is an important development in video today. Anyone shopping for an HDTV should demand an HDCP-compatible video connection.
It's no secret the entertainment industry has been suffering losses due to piracy. You can't even go see a movie today without some heartfelt plea from the industry's blue collar asking you not to pirate his hard work. The DVD medium has long made analogue-only video outputs on players. This has been fine with the entertainment industry because copies made from analogue video sources suffer some degradation.
HDCP is a standard created by Intel to encrypt outbound video signals which can be decrypted by any HDCP compatible receiver. So, DVD players can now have a true digital video signal delivery system and not need to muddy the video quality by converting it to analogue just to send it to the TV. Using a digital video signal delivery method can improve clarity and resolution of your picture by as much as 15%.
Currently DVI is the most common HDCP-enabled video interface. On the horizon, DVI will be overcome by HDMI, which is an HDCP-enabled audio and video interface.