There are way too many people who just coughed up the money for YT Premium for google to consider it, unless there's some major breakthrough in video encoding, there's no way it would work embedding content in the video stream itself, the hardware costs are way too high considering the throughput google goes through for YT, the main issue is dynamic advertising, they'll need to encode videos in real time for billions of users at a time, each time, they'll need to use adsense and insert an appropriate advert for a user and even that is a monumental task in a normal scenario, imagine doing it in a video? nah, aint no way, Streaming services have been grappling with this issue for a long time now, and they just have to servr content to users, they dont need any dynamic advert in the video itself and even they have pretty much hit the wall for scalability, there's a reason why bitrates dropped dramatically during covid, why even now, bitrates for streaming services wont exceed 15-25mbps and even at that, its rare you ever hit the full bitrate for a stream, Scalability is a massive issue, specially for something like encoding where there's just no way they can ignore the blocking IO in cpu/storage for each video.
The only way I can figure is they'll cut the videos into clips, insert adverts dynamically and try to make it as seamless as possible, and even this is pretty easy to work around, the only way it'll work is if the video from server itself has adverts embedded in it which is what it says in the article
yep, that they are, Revanced has been a lot less stable these days, I think google is counting on the fact that premium is cheap enough for people, that they'd rather pay for it then go through this PITA process of having to build/install revanced again.