A system and method for just-in-time embedded watermarking of streaming digital content. The system employs sequential processing to transcode streaming content to embed a user-specific watermark into the streaming content. Additionally, the just-in-time embedded watermarking system transcodes short segments of content on an as-needed basis, in response to user requests, instead of performing bulk transcoding of large amounts of content at once. Accordingly, the just-in-time embedded watermarking system provides consistent and predictable user playback experience. Further, the system automatically supports adaptive bit rate optimization by providing interoperability with multiple potential adaptive bit rates requestable by the content player device. The system watermarks the requested content segment in real-time during the streaming of the content by causing burn-in of the user-specific watermark into the streaming content.