Why HDCP is still used despite being utterly broken is simply the fact that it gives media corporations 'control'. You know those anti-circumvention laws for DRM? Yeah. Even DVDs still ship with CSS for this reason - when RealNetworks released RealDVD, their DVD ripping program (which wasn't even particularly good or useful, as it produced Real Media files with Real's own DRM included), they were sued by DVD Copy Control Association and lost.[1] So even if the DRM itself is utterly broken, when combined with anti-circumvention laws it allows the media industry to shut down any "rogue players" - in other words, it gives them control. And the gatekeepers, oh, they just love control.
I think you're correct about 'control', but that begs a question:
Why is control that important? It's not control for the sake of generating money, they'd probably make more money, in a bigger industry, if they didn't exert such fine-grained control. Is it that much fun to dictate popular culture, or is something else going on behind the scenes, other than hookers and blow?
It's what they're used to - back before the internet existed, these middlemen pretty much had total control over what media people were exposed to. They were the gatekeepers of media. Then the internet came along, which has changed the way people get exposed to media dramatically. The gatekeepers hate it, because it takes away control from them, and they try their hardest to undo the effects of the internet with DRM, laws, etc. Of course, middlemen are still necessary even in the digital age, but a good middleman in this day and age is not a gatekeeper, but rather an enabler (for music, think Soundcloud, Bandcamp, Tunecore and so on for example).
[1] http://en.wikipedia.org/wiki/RealNetworks,_Inc._v._DVD_Copy_....