A recent update that came through Windows Update on December 9th, 2014, appears to be breaking the PlayReady DRM used by Media Center. Members of the GreenButton.tv forum are indicating that the culprit is update KB3004394. The update applies to all versions of Windows 7, Windows 8, Windows 8.1, although only Windows 7 has been tested for breakage so far. If it breaks PlayReady for all of those versions, the Media Center users will be unable to play back any protected content including watching live TV and watching recorded TV. Any non-protected content, like over the air recordings, should play back just fine.
Do not attempt to reinstall PlayReady, as you may loose access to your existing library of protected content. It appears that the best fix, until Microsoft addresses this, is to remove the update 3004394.
Thanks to Paul Honens for the tip!