[freefaler]

Pretty easy actually.

All video is streamed in blocks currently (HLS streaming mostly). So if they really want they would inject adds inside those blocks and the player won't be able to distinguish between ads blocks and video blocks. They can stop sending you blocks if you didn't get all the "ad blocks" beforehand for the duration of the ad. Even if your player "knows" because of a "Sponsor Block" database the interval it needs to skip, by not giving you the blocks beforehand you'd need to wait.

They can also give the stream only to DRM compliant players.

We may end up with some shadow YT libraries with ripped videos. Some distributed crypto hosting platform where the more you seed/rip, the more tokens you get for watching or something like that.

[freefaler]

"The only free cheese you'll find is in the mousetrap". Free hosting and streaming is not guaranteed, when the big company pays for the hosting.