Flash used for delivering video is only a subset. A far wider use of the platform is RIA, which to duplicate in HTML would require some fancy JavaScript. We all know how fun it is to code JavaScript to ensure it works the same on all browsers.
As a video platform, Silverlight actually beats out Flash (Netflix and some other VOD players use it) yet Microsoft continues to have trouble getting people to adopt it. The "better app" isn't always quickly adopted. Sometimes it's never adopted.
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