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this post was submitted on 02 Dec 2023
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Baked in ads run counter to googles entire ad philosophy though, to say nothing of the technical challenges that poses. Googles big selling point right now is targeted ads where the ads they serve you are based on your activities that they've tracked. With baked in ads every viewer of that stream gets the same ads, so while they could traget ads based on the contents of the stream, they would no longer be able to target the ads at specific viewers.
There's also the problem that baked in ads are in many ways actually easier to skip. There are already extensions like sponsorblock that can skip specific segments of videos, and if it's not served as a separate stream it will be more difficult to give special treatment to the ad portion of the video.
I have some background in tech but admit I'm a long way out of touch now. I wouldn't be at all surprised if they're working on back end stuff to have personalised ads "baked in". I know the resource implications of this are huge, but it still wouldn't surprise me.
The resource implications are the problem. The cost - in terms of compute time - to bake those ads eats into the profit earned from advertising as a whole. Since only a fraction of users adblock, they would probably lose more money than they gained.
They'll consider it once the compute cost inserting the ads is low enough that it's worth it. I have no idea if we've reached that point yet, but I'm guessing not, since otherwise they'd already be doing it.
Most of the formats served by YouTube are already chunked, which means they can easily insert different chunks of video (ads, etc) at various points in the stream by changing the manifest. This is trivial, computationally. The complexity lies in building the mechanisms to make it work.
The non-chunked formats are only used by older devices, and are lower quality. Those would require re-encoding to change, but few users see them anyway, and those users probably don't adblock.