The challenge is that videos will have a varying amount or type of ads based on the client’s country/demographic and simply on the timing of ad campaigns.

Not baking-in ads was the advantage of Youtube and other streaming platforms over the likes of traditional TV. That’s why they were client-side in the first place. I wonder how much the extra effort, bandwidth, and processing will cost Youtube to achieve server-side ads. Would be funny if it simply ended up being too expensive for them.