[aslkdjaslkdj]

Wanting to do targeting for the specific user makes that really hard. They would have to do real-time transcoding of the ad into the video. Makes more sense to transcode the video once at upload then dynamically insert just the ad.

[hollerith]

Youtube controls the client, so they could switch to a format (a brand-new format if necessary) that makes it computationally cheap to catenate videos.