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YouTube’s ad blocker crackdown now includes third-party apps
(www.theverge.com)
This is a most excellent place for technology news and articles.
No, but Netflix and other video services do it, so it's totally feasible. I assume most of the cdn infra YouTube already does would stay the same, the main change would be the insertion of ads (they already do video processing) and encryption (which is probably not that hard).