This type of situation nontrivially raises the chance of tragedy if I decided to use this app in urban areas.
That's how I see it. Maybe your app could catch on in Japan, which offers "texting lanes" (dedicated sections of road for phone users completely lost to their environments) in some areas.
The only way I could see such an app being useful is if you were able to usefully blend the rear camera with the video being played in a way that was nondistracting.
My waifu was nagging me about the Z-Wave sensors I was putting up around the house so I turned the conversation around to "what is something useful we can do with these gadgets?"
One idea was the "fitness tracker with consequences". Didn't take your 10,000 steps today, well the refrigerator won't unlock until you do. Parents struggle with enforcing screen time limits on their children and some system where the child earns screen time by being active could be a good answer. The flaw I see in the scheme above is that you have to walk when you are enjoying your activity; if you could save up your steps to spend them later that would be better.