Good point. It has gotten quite a bit cheaper and easier to carry one's own music and movies (iPods, laptops, etc), and the trend is likely to continue as laptops get smaller and lighter, and have more storage. Add to that the fact that carriers are starting to offer WiFi, so pax will be able to access streaming video via their laptops, and you have to wonder about the airlines investing money in costly, heavy systems that are becoming more unnecessary by the day.

To the OP's original question, though: I agree that it would be nice for the airline to notify pax if they know the system isn't working. Still, it's possible that technicians were trying to get it fixed before the flight, so it may not have been clear that the system wouldn't be operable. Just imagine if they announced that the system wasn't working, and then they got it fixed at the last minute. Pax would be complaining about having spent $$ on DVDs in the airport when it later turned out that they didn't need to.

Like another poster mentioned, I hedge my bets by always bringing along something (laptop, iPod, book, or all of the above), just in case the system is down....