The whole business model hangs by a slender thread. Real is basing this on a court case that was decided in favor of Kaleidescape, which makes home media servers. The Kaleidescape decision is being appealed by the DVD Copy Control Association by the way, and they are also suing Real now.
Real has filed their own suit asking for a declaratory judgement upholding the legality of their system, but with the DVD CCA suing them, I doubt that goes through.
If the various members of the DVD CCA ever manage to agree on changes to their basic licensing agreement the whole house of cards that is RealDVD and Kaleidoscope Systems could come crashing down. The DVD CCA are claiming any system that plays back copy protected movies has to have access to the physical disks, though it is not explicitly stated so in their current license. If they can ever quit their squabbling long enough to amend that license, the game is over.
The bigger question is why Real thinks they can get through this unscathed.
If the whole thing lasts long enough, maybe Slysoft will be so obliging as to get rid of the additional DRM that Real is putting on the copies.