Region Code Enhanced
Also known as just "RCE" or "REA", this was a retroactive attempt to prevent the playing of one region's discs in another region, even if the disc was played in a region free player. The scheme was deployed on only a handful of discs. The disc contained the main program material region coded as region 1. But it also contained a short video loop of a map of the world showing the regions, which was coded as region 2, 3, 4, 5, and 6. The intention was that when the disc was played in a non-region 1 player, the player would default to playing the material for its native region. This played the map, which was impossible to escape from, as the user controls were disabled.
However, it is easy to work around the scheme. A region-free player tries to play a disc using the last region that worked with the previously inserted disc. If it cannot play the disc, then it tries another region until one is found that works. RCE could thus be defeated by briefly playing a "normal" region 1 disc, and then inserting the RCE protected region 1 disc, which would now play. RCE caused a few problems with genuine region 1 players.
As of 2007, many "multi-region" DVD players defeat regional lockout and RCE by automatically identifying and matching a disc's region code and/or allowing the user to manually select a particular region. Some manufacturers of DVD players now freely supply information on how to disable regional lockout, and on some recent models, it appears to be disabled by default. Programs such as DVD Shrink are also capable of removing RCE protection, provided the operator knows what the region of the disk actually is. If the region is specified correctly, the copy will play in any region.
Purpose
There are many purposes that region coding can achieve, but a primary one is price discrimination. Price discrimination is the economic principle of demanding a higher price from buyers who are willing - and able - to pay more. Price discrimination is especially applicable to movies, because the marginal cost of selling one copy (or viewing) is quite small, giving the seller great flexibility in pricing. There is great disparity among the regions of the world in how much a person is willing to pay for a DVD, and region encoding allows a publisher to sell a DVD for less money in the regions where the demand is low and more where the demand is high.
Another purpose is controlling release dates. One of the traditions of movie marketing that the advent of home video threatened is the practice of releasing a movie (to theaters) later in some countries than in others. The threat from video tape was muted by the coincidence that television broadcast standards, and thus video tape formats, were for historical reasons regional. But apart from region coding, the DVD format is meant to be playable everywhere.
Legal concerns
Region code enforcement has been discussed as a possible violation of World Trade Organization free trade agreements or competition law. The Australian Competition and Consumer Commission (ACCC) has warned that DVD players that enforce region coding may violate their Trade Practices Act. The government of New Zealand is also considering a similar ruling. This means that all DVD players sold in those territories have to be region-free. In the United Kingdom, dvd players are legally required to be region 2.
Movie publishers misused region coding when they released older material with full region coding—there being no requirement, per the stated cinema-blockout justification provided, to restrict sales to certain countries. There are concerns, voiced by the European Union, that region coding was solely an attempt to enforce price differentials.