Is it because it would break compatibility with some devices? Is it too expensive?
(not that I'd like that; I always download videos from YouTube for my personal archive, and I only use 3rd party or modified clients)
People underestimate how much engineering Netflix have put in over the years to get it to work seamlessly and without much playback start latency, and replicating that over literally millions of existing videos is pretty non-trivial, as is re-transcoding.
It's not because of older devices - any TV that has got a YouTube app for a decade was required to support Widevine as part of the agreement to get the app, so the tail end of devices you'd cut off would be tiny, and even if they wanted to keep them in use you could probably use the client certificate to authenticate them and disallow general web access. It wouldn't be 100% fullproof but if any open source project used an extracted key you could revoke it quickly.