AACS stands for Advanced Access Content System and really refers more to an agreement among the people who make video recording and playback devices than a specific technology.
Mike Evangelist, who used to be the chief video guy at Apple and knows where at least some of the bodies are buried, tried to blow the whistle on this recently by calling for a consumer boycott of HD products. In his words
This is important. I really want you to understand what's going on with the video industry's push towards HD. Under pressure from Hollywood, they are engineering a complete removal of the concept of fair use. They are setting up systems that will completely control how, when and where you can use content that you buy. Even worse, they can retroactively change the rules!
The first four letters in DTCP-IP stand for Digital Transmission Content Protection. This is an Intel technology described at length in a joint presentation by Brett Branch (Technical Marketing Engineer, Intel Digital Home Group) and Alec Main (Chief Technology Officer, Cloakware) to the recent Intel developer conference called DTCP-IP Applied - Secure Premium Content Module.
The digital transmission content protection scheme uses a pretty standard digital signature and authentication protocol to prevent the transmission of digital content to unauthorized destination devices. Basically the sending device is going to query receiving devices to see if the license encoded in the material itself authorizes having it sent to, or stored on, that receiving device.
Notice that DTCP is not a DRM technology, it is a DRM enforcement technology. If the five play license you purchased with your favorite movie DVD expires and you manage to download some code that breaks the DRM lock, you'll find that your HD screen uses embedded DTCP-IP and will refuse to accept the data transmission for display from an unlicensed source.
Both AACS and DTCP-IP have "forward looking" elements too: for example AACS commits signatories to an all digital world, end of lifing (uncontrollable) analog device manufacturing while DTCP-IP envisages a need to control content rights after that content has been downloaded to an end-user device. Between the two, the content owner could, for example, force content erasure on rights expiry - even if that expiry is the result of a policy or pricing change made after you obtain your initial content license.
So how do these two things come together? AACS is fundamentally aimed at controlling what the people who make players and recording devices enable the consumer to do with those devices, and DTCP-IP is fundamentally about controlling which of those devices people use to record and display licensed digital content. In other words, these are the key elements in two halfs of a set of controls aimed at reducing or eliminating your ability to record entertainment materials like a TV show or pop tune and then watch it, or listen to it, when, where, or as often as you choose.
Microsoft has identified itself with both AACS and DTCP-IP and is betting the farm on using DRM to push the X360 into a significant home entertainment role. Apple (at least to my knowledge) has not; but Apple is widely thought to have serious ambitions in digital video distribution.
One rumor about Apple's plans, for example, suggests that people will be able to buy digital video content from an Apple "iVideo" store just as you can buy music from the iTunes store now, but with two big differences. First the video would be stored on "your" slice of an Apple server rather than downloaded to you, and, secondly, you'll buy a display license for one or more specified devices rather than the video content itself. Licensed devices can then show the video at any time, by downloading it from Apple's servers and using RAM, not disk, to buffer it for quality of service purposes.
A license encoded on an iPod, USB key, or smart phone would enable portability - authorizing player gear other than your own to download and play whatever content you've licensed, provided only that the connectivity is in place and the target gear plays nicely with DTCP-IP.
(Note, incidently, that there's an oddity about Apple's rumored plans in this area: the Microsoft/Intel alliance selling this stuff to the studios isn't the technology leader. Freescale is, and they have all the other stuff - like an UltraWideBand radio chipset for wireless component linkup or on board cryptography within SoC (System on a Chip) processors, needed to make it work.)
In principle there shouldn't be anything wrong with what the industry is planning: you pay to rent content for use on a licensed device and you get exactly what you pay for.
In practice, the world's not quite ready for it. In particular there are two problems:
As a result some kind of interim offering may be expected - for example, electronic distribution through retailers, like Blockbuster, that have a national presence with in-store kiosks writing content protected DVDs for customer use on traditional equipment like DVD players.
In the long run, however, AACS and DTCP-IP seem intended to become defining elements of a brave new world in which you can only rent, never buy, content; and a big content owner, like Disney, can reach right into your living to affect what you watch, when you watch it, and what equipment you do that on.