Thank you all for the replies. I do understand your position better now. I also understand that motion and stills are different disiplines to a certain degree.
I do both professionally and have been for the last seven years. For me DSLR's with video have been a great tool for the type of work I do. Corporate work that often includes web based videos, portraits, office/factory photography, etc.
The ability to carry one camera that I know well and one set of lenses, just makes the transition from video to photography work a little easier when going back and forth.
As for cost. I would guess that having video on DSLRs probably balances out. Whatever R&D cost that goes into these cameras for video functionality is probably paid for by the increased sales of people now buying these cameras primarily for video work, whereas before they would not have bought them but instead gone with a more traditional style video camera. But the market has now shifted and consumers aren't buying $1000+ dollar dedicated video cameras unless they are professionals or indie filmmakers.
There is also the benefit that someone like myself would be willing to pay more for a camera that can do both, than have to buy two different cameras, the other of which maybe not from the same manufacturer. I can use the same lenses and accessories. It saves me money overall.
Maybe I came off too strong in saying that the photography side is good enough and they need to just focus on video. Obviously there is no end to what can be improved for photography. That said, some of you pointed out dynamic range and better ISO sensitivity for low light. Something that is not just beneficial to photography but video as well. Good images are desired in both camps. That we can all agree on.
But at least one of you pointed out that you can shoot raw photos on a DSLR however the video quality isn't that great. That's really where I was coming from. When we can buy digital rebels that shoot raw video at 1080p or 4K in variable frame rates and 13+ stops of dynamic range, there wont be a lot of complaints on the video side.
The difference between video and photography is that Canon now has a higher end product to protect on the video side. So a lot of video people feel that they are artificially crippling the video functionality on their DSLRs as a result. Whereas these are their high end stills cameras, so there is nothing to cripple to protect something higher up the chain. Unless they bring out a medium format system at $10K+.
For example, if Canon decided that you can only shoot raw photos on a 5D3 and above, a lot of screaming and yelling would be going on from the APS-C and 6D crowd. Yet that is exactly what they seem to be doing with the video functionality on these cameras. Leaving out little things like headphone jacks, better recording codecs, clean HDMI outputs, higher frame rates, etc. That is primarily why I say that video functionality needs to be their top priority right now. Not because they should stop work on improving stills functionality, but because they are starting to lag behind Panasonic and even Nikon in the video realm.
Why even include video?
I think the answer is simple. Both industries right now (Photography and Video) are struggling against cheaper alternatives like smartphones. By binding the two functions together on their top end cameras they can sell the same camera to both markets. Plus it does sound better to say "this camera can do both."
I would also think that would actually save them some money.
Someone above used a car analogy. I've often wondered if car companies could be more profitable by getting rid of all the by-to-order options and just including all the available features on every vehicle. It would certainly simplify inventory when the only difference is the exterior color of the car. I would think that it would streamline the whole process from design to manufacturing when you cut out all that extra time and work keeping the same model with different features on the lot. This process seemed to work for Apple in the late 90's when they streamlined their product line to just four models. I assume it works for camera manfuacturers as well. I can only imagine the headache of having to make and stock the same camera model in three types; video only, photo only and video+photo.