Remind me again, why do people connect their TV to the Internet? I used to work in the space more than a decade ago, and even then the privacy invasions most major brands did were inexcusable.
Most people don't want an extra box or dongle? Everyone likes devices you can just plug in, push some remote buttons, and you're done. Even when the set top box works, something inevitably goes awry, such as audio issues non-HDMI sound output, or not seeing video because the soundbar isn't connected to the box or dongle, and so on and so on. Remember those households with the blinking 12 on the VCR? Yeah, folks just want to watch their movies, they don't need to know how this stuff works, even the basics. I know too many people who watch movies on Netflix on an iPad because it's easier to do that than to configure their smart projector every time. We really haven't made technology that much easier to use yet, but it's getting closer, maybe.
Convenience and coercion - they don't want to fiddle with external devices just to watch a movie/show, and streaming services deliver content at a higher quality to these locked-down devices. Had this talk with my parents recently, privacy is infinitely less relevant to them compared to the ease of use.
Also, the screens spying on you and showing ads are often very subtle about it. They don't tell you every time they take a screenshot, they don't make a loud "click" sound, they don't advertise it. They're not even legally obligated to do anything other than tell you about it in buried legalese. LG will say you need to agree to new privacy terms so that you can use the "microphone" button on your remote control, for example. I persist in ignoring that one, but I'm sure others wouldn't and haven't. Amazon lately has been blatant with how much advertising is ruining their services and sticks, to the point where I don't go to Amazon to search for products now, they've just ruined it. Not every spying, advertising-laden service provider is as obvious as Amazon about it, though.