Why don't you tell us Why Flash became the video standard for the web?
Because at the time, there was very little competition that supported what the media companies wanted - a way to lock down their content so that customers could not download it. Development was also really cheap despite it being difficult to program properly. The high availability of tools lead to the adoption.
From Wikipedia:
Many shareware developers produced Flash creation tools and sold them for under US$50 between 2000 and 2002. In 2003 competition and the emergence of free Flash creation tools had driven many third-party Flash-creation tool-makers out of the market, allowing the remaining developers to raise their prices, although many of the products still cost less than US$100 and support ActionScript.
This little quote explains how it got so popular too (again Wiki):
The use of vector graphics combined with program code allows Flash files to be smaller and thus for streams to use less bandwidth than the corresponding bitmaps or video clips. For content in a single format (such as just text, video, or audio), other alternatives may provide better performance and consume less CPU power than the corresponding Flash movie, for example when using transparency or making large screen updates such as photographic or text fades.
Once Macromedia got enough market dominance, it started to muscle out any viable competition - Adobe gave up and had to outright buy Macromedia as described here:
The W3C's SVG and SMIL standards are seen as the closest competitors of Flash. Adobe used to develop and distribute the 'Adobe SVG Viewer' client plug-in for MS Internet Explorer, but has recently announced its discontinuation. It has been noted by industry commentators that this was probably no coincidence at a time when Adobe moved from competing with Macromedia's Flash to owning the technology itself
Cite
In short: Macromedia got an early start and got real lucky with leadn and efficient code to take advantage of technological limits, and kept it proprietary leading people to poorly implement it due to lack of tools. It doesn't help that it does have limits that have never been properly addressed and due to the early massive adoption, doesn't get changed. It isn't as if Flash rules because it is good - it in fact has several limitations, its just that there never any good alternatives that were not heavily proprietary.