> but YouTube had the technical option of splicing ads directly into the video stream and simply not sending the actual video content for the duration of the ad for several years now
I don't think that's true, video encoding is expensive. This is not trivial to do without investment in hardware.
Google doesn't just sell ads, they sell targeted ads. Yes, YouTube currently does some processing on every video uploaded. But they only do that once.
It's trivial to send a different stream, though, and stop sending content for the primary stream for the duration. I believe a comment elsewhere says Twitch is doing this with HLS
I don't think that's true, video encoding is expensive. This is not trivial to do without investment in hardware.
Google doesn't just sell ads, they sell targeted ads. Yes, YouTube currently does some processing on every video uploaded. But they only do that once.