My friends use this! We have a shared Jellyfin server we access via Tailscale since we got fed up with streaming and figured since the AI companies can freely pirate stuff, why don't we do that too. We often download media locally to watch offline (like when traveling) and use IINA on our macOS devices because it does colors better than VLC.
On the other hand I am guessing most people don't view their media on their computer anymore. Everything is online and streaming.