Not all seats come equipped with power sockets. Watching movies on long-haul (transatlantic) flights, after using your device while waiting to board, had a good chance of running the battery flat before the trip is complete.

Economy seats sometimes have a pitch so narrow that it's difficult to get a tablet sitting at a comfortable viewing angle.

Additionally, it's sometimes convenient to use the in-flight entertainment systems when travelling with someone else. My girlfriend and I can watch the same movie, at the same time, without awkwardly balancing a tablet between us and having to use a headphone splitter.

You have to prepare for it - have a full battery (most of the planes don't have USB or the plug doesn't supply enough current), have the movies/music already on the phone/tablet. Not everyone is using the phone for this kind of entertainment, so they have to prepare before, and because most of the entertainment is now "in the cloud" and consumed on the fly, you have to know how to copy them for offline use.

Also, the in-flight entertainment system is better positioned than a normal phone or tablet - you need a special case or something to hold a tablet/phone in a kind of vertical position on the little table (also needs preparing for), and you have to look down to it all the time - which is bad for your back, especially in the crammed plane seats.

DRM?

I never tried watching movies in an airplane, and if I wanted to, I know I'd do it easily. But most people do not get video in a format that they know how to watch in an environment without an internet connection.

In flight systems typically have fairly recent movies, that sometimes haven't even come out on consumer media yet.