Simply extracting the file is usually only half the battle. Most users want to modify the firmware (e.g., adding apps, removing bloatware, or fixing the "red text" error screen) and then repackage the file so it can be flashed back to the device.
Manufacturers encrypt firmware to protect their intellectual property, prevent unauthorized modifications (modding), and stop users from finding security vulnerabilities in their code. The encryption algorithm requires a specific cryptographic key (password) to unpack. 2. Proprietary File Signatures