Okay thinking about it some more it could be made to work provided that the watermarks could be either muxed or rewritten by devices in the middle of the chain. However the entire thing would be a bit on the complex side, would require reendcoding a given video stream in real time on the fly at each relevant point (ex at the streaming service CDN edge node and then again at the client device), and would most likely be rendered pointless unless all display devices were legally mandated to require the presence of the watermark in order to function.

Keep in mind that distributors absolutely do not want to reencode video per client at the edge. IIUC they go a long way out of their way to avoid ever having to do that, with the current watermarking scheme working by randomly selecting chunks to send from two or more pre-encoded video streams.

Meanwhile AI appears poised to give us unlimited approximately free (plus a few kW hours) entertainment at least assuming it doesn't end up somehow killing us all.