Maybe a demo video is a good idea, maybe not. Personally, I would not look at a demo video at all, but perhaps others would. Don't take my word for it (sample size N=1) Presumably you've asked your potential customers and believe it would help.

Agree 100% with the other commenters: The sign-up flow is super-high friction. You did the first step right though, you measured the funnel and found out that people are dropping out! Have you measured each screen in your sign-up flow to see which one is causing the most churn? At a previous company, the best thing we did to increase active users was to remove almost all of the multi-step sign-in flow and get people into the application right away. We were down to a single E-mail capture screen, which I strongly argued to remove as well, but couldn't convince Marketing. I instead got a button to skip the E-mail capture, which helped :)

Keep measuring!