I tried launching chrome headless with the below arguments.
/Applications/Google\ Chrome.app/Contents/MacOS/Google\ Chrome --headless --remote-debugging-port=9222 --disable-gpu https://www.netflix.com/
I then used the chrome debugging port to navigate within the app and play a DRM protected video. Video never plays. But this works if i play a clear content.
is there any flag that i need to turn on to make DRM work in chrome headless mode?
This is currently not possible. What you are looking for is specifically the EME keySystems, that are not currently available in headless mode.
There is a bug filed with Google that requests this be changed, but that bug is still not resolved. I suggest you follow that for any updates.