It's been years, so take this with a truckload of salt, but if I recall correctly the issue was licensed code, along with a mostly ad-hoc structure of the player which meant extracting this would be difficult without a total rewrite, which is hard enough as is to justify but probably even more so when there's no clear business incentive for it. As well, a rewrite means considerable risk to breaking old content, which Adobe (and before them Macromedia) worked pretty hard not to do. I can see why this wasn't very palatable.

As I said though, it's been years and I'm just relaying what I can recall so I may very well be getting things wrong.