> Should closed hardware (that owns its entire stack) even be legal to sell?
No.
> You can't argue that Prima Cinema should not be locked down (claiming anti-competitive behavior) because the paranoid film studios wouldn't even license their content if it wasn't.
You can actually. They demand this kind of DRM because they know the customer would sooner say yes to it than not get the movie. But that's only because they're in the better bargaining position as the only source for the movie -- it's leveraging the copyright monopoly into perfidious control over the device market. But they still, at the end of the day, want your money. Which means that if the thing they're insisting on is prohibited, they'll make it work without it.
Consider the general argument you're making. It's basically that if DRM was prohibited by law then Hollywood wouldn't distribute movies at all. But that's farcical -- they would have no revenue. Instead they would just distribute them without it, because they'd have no other option.
Okay, but what about your edge case, the really fancy one with the hardware anti-tampering. Wouldn't they at least not have that one? Still no, because it's still the same thing. The only point in having that is to try to push back the day when the movie is on all the pirate sites. But it's only to push it back while they're still distributing it using the higher margin distribution channels. If DRM was prohibited whatsoever then they couldn't use it there, so they would distribute it even there without it because otherwise there is no high margin early release market to protect.