Let me pay money and download a DRM-free mp4 that I can keep forever and watch anywhere. I'd do it and so would a sizable percentage of existing pirates.
> The latter costs money, but is more convenient.
Not really. If my internet connection is fast, I can download a movie in a few minutes and watch it in VLC, which is more user-friendly than any web player. If my internet connection is slow, streaming won't work anyway. Maybe there's a medium-speed sweet spot in between for which streaming is more convenient, but I suspect only a minority of users occupy that sweet spot.
> Illegal streaming services are not viable because they're centralised and easy to crack down on
No, illegal streaming services are not viable because torrents exist and people prefer downloading movies to streaming them. People who prefer legal streaming services over illegal downloads do so because of the legal vs illegal bit, not because of the streaming vs downloads bit.