Reason is that Flash is the only technology that available to majority
of users (95%% and growing) and supports cross-platform video playback.
Flash video (FLV) is based on MPEG4, and with couple of extensions for
Firefox you can download and convert such videos without problems.

And, by the way, what are "open" video standards for the Internet
again?

P.S. Also, in case if you didn't know - Flash is documented and open
source implementations of reader/writers are widely available.