I am not 100% certain I understand this story, but it seems the Motion Picture Association of America has decided that sending out DVD copies of movies to Academy Award voters results in too many pirated copies of the works showing up. The MPAA's solution is to ban such "screening" media.
But actors and directors note that there is no way Academy voters can see many small-budget films unless it is on a disc. They want the ban reversed.
Like I said, I'm not sure a get all the issues at play because it sure seems like a sure watermarking mechanism for a relative handful of discs could solve things without dooming low-budget films to Oscar obscurity.