I think theyre more saying that on the other peoples websites, they are embeding the movie link that is stored on nomad's server.
Ie:
On website2..
<embed src="http://www.nomad.com/movie1.avi">
There isnt a way with PHP to solve this that I know of.
If you are running Apache you can set up an .htaccess file, and say that requests for your video files can only come from within your own site. If it comes from an external site the file will not load on the thiefs website.