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YouTube's next move might make it virtually impossible to block ads
(www.androidpolice.com)
This is a most excellent place for technology news and articles.
Re-encoding is one thing, but ads are more or less supposed to be dynamic based on user location and likely some other data to target them.
Offloading that to the client made a lot of sense but now they have to do this server-side, they have very smart people working on making this as efficient as possible using tricks you've mentioned and more but it is still more effort than before. All for something that will likely be circumvented eventually.
All of that targeting data lives on Google’s servers already. Your computer isn’t trying to figure out who you are and what you like each ad play, Google already knows who you are when your browser makes a request for a video. Everything you are talking about is already server-side.
The data is but the client gets the specific bits from a CDN. Now they need a server to stitch these server side and stream it to you.