Well, having the OS do the decoding of the video stream on behalf of the multiple applications likely using it to me sounds like a good idea…
…If the applications using the stream are in fact doing the decode themselves.
They assumed this was the case. If an application is simply pumping the video stream elsewhere though, why would it bother decoding it? It may well be expecting an encoded stream, and yes, when you upset the status quo, applications crash.
I'm not certain that DRM had anything to do with it, or that not doing this would necessarily have any effect on DRM implementation. Let's face it, unless you run a different OS, they've got root.