Users replacing their devices isn’t feasible in many parts of the world, especially outside of the west.

You are correct that a service similar in scale and scope would not appear out of the aether due to the cost, but to say nothing would make a grab for those underserved users would be foolish.

Again - the entry level cost conscious users do constitute a large part of Youtube’s userbase, so even if they are burdensome to support (due to ad blocking rates, required legacy features to upkeep, and so on), they are a core part of the audience that youtube serves. In an economic environment where people cannot afford to abandon their hardware, there is no chance they will opt out of receiving information and entertainment entirely because of their devices being unsupported by google’s sites. They will move to the next service in the chain, either existing or new. To google’s investors, that shrinkage in userbase may be untenable.