I am not for ads but what is so difficult about adding them to the video stream. This should make adblockers useless since they can't differentiate between the video and the ad. I could just imagine it would be difficult to track the view time of the user and this could make the view useless since they can't prove it to the ad customer. I have no in depth knowledge about hls but as I know it's an index file with urls to small fragments of the streamed file. The index file could be regenerated with inserted ad parts and randomized times to make blocking specific video segments useless.
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It already happens, videos contain sponsored segments added by the creator.
But even those have a solution in the form of Sponsorblock, which crowdfunds the location in the video containing sponsored segments in order to skip them.
Google should face the fact that they won't ever be able to win.
There is a whole topic in wasm called server side rendered DOM.
I hardly think there is a chance to block adds when they achieve it to render all the content on their side.
Ads are not always the same, not for everyone. Ads are localized in time, space and per person sometimes.
An advanced adblock would just need to download the video from two sources match the videos and eliminate the differences as those differences will surely be ads.