The VideoLAN Forums

First, I know people hate to hear DRM, but a group of companies want something akin to it.

What I'm attempting to do is build a custom version of VLC into an application and enable playback based on authentication within the app and then remove any inbuilt record features. Apps that record streams will not be an issue.

My questions are

1) Is this doable?
2) Is the current implementation of VLC capable of decrypting on the fly without decrypting the whole file (we don't want the decrypted file stored on disk)
3) Is this permitted?

for the point n3 you should read the license (GPL2 AND LGPL2) and this page

1) yes. Do a stream filter.
2) yes.
3) yes, see LGPLv2.1 license.