It's unreliable. You depend on a website to stream video to you—video which can be pulled at any time for any number of reasons. For example if the studio which owns it wants more money.
Now compare that to a video sitting on your hard drive. Maybe you ripped it from your legally bought DVDs. Maybe you downloaded it illegally. Maybe you bought it legally through something like iTunes or Amazon Unbox. But the point is that the video is "yours" in the sense that it is on your computer and you can control it. (Now that's not necessarily true in the case of DRM encumbered video that you can buy legally but I think you get my point.) Video on the web can go "poof" at any time.
The movie and TV industries bitterly complain about piracy but it's largely a phenomenon of their own doing. Hulu largely exists because the TV industry wanted to have a place where they could stream their shows and maintain control of them, providing users with an alternative to piracy. And yet it is still hard to find complete series of many of Hulu's shows. And pulling shows doesn't help. (It's called "Video on Demand" not "Video When the Studios Feel Like Giving it to You.") The bottom line is that until people can rely on web video to always be there, they will be tempted to pirate movies and TV.
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