With the advent of high-definition televisions, HDMI, and HD video, you may wonder why some people bother with analog connections and analog technology, when digital appears to produce excellent results. There are some good reasons for this.

Cost

Analog cables are much cheaper, in terms of dollar per foot. While shopping online, you can find much more aggressive pricing on digital cables, but they have a reputation for being particularly expensive at retail.

Cable Length

An analog audio or video cable can go hundreds of feet without substantial loss in signal quality. Meanwhile, an HDMI cable may not be able to get from one side of the room to the other without the user having to resort to amplification gadgets.

The Digital Cliff

This term refers to how a digital signal will work just fine or not work at all. Analog has a long middle ground where the quality of a signal can degrade smoothly. This is how even a beaten up cassette tape can last 20 years, while a brand new CD can be ruined with a few scratches.

Signal Capacity

For some users, analog is good enough for their needs. You can transmit a 720p signal from your DVD player to an HDTV with standard analog component cables, and even 1080i. It's not until 1080p that digital is required, and that's because of copyright management obstacles, not technological limitations.

Ubiquity

If you have owned a home theater system for several years, odds are that you have accumulated multiple sets of analog cables. Since these cables can transmit high-quality signals, you may not have a great incentive to go out and purchase digital versions.

Source:

TechFAQ; What is HDMI?

Projector Central; So what is "Component Video" anyway?