It seems weird to use specialized video decode hardware when videos are almost always played in a full-screen exclusive fashion. Like, other than loading, what is the CPU doing during those times?
You mean a single - full screen video, or videos inside the 3D content?
Supergiant Games' titles since Bastion all use RAD's Bink codec to store offline renders of their character models (as movies) instead of traditional sprite sheets or realtime rendered 3d models, so they're playing back dozens of movies at all times.
As another reply mentioned, it's also standard at this point for loading screens to be movies.
Of course you can do video decoding in software, that's what Bink is. It can do 4K60 on a PS4 CPU.
My feeling is that big budget games are prepared to jump through the hoops in order to wring the last drop of video quality (or add hours more 'content') but when timelines are short and engineers are thinly spread Bink is a great way to just get it done and move along.
On the PC, all formats are theoretically supported, but there's always that one person with an outdated AMD driver and Korean Windows XP.
I'll take a small handful of weird but very specific specs over the PC situation any day of the week.