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Video streaming sites like YouTube are experimenting with server-side ad insertion

Server-side ad insertion differs from normal YouTube ad insertion techniques primarily in how ads are delivered to viewers. In traditional methods, ads are served separately from the video content, allowing ad blockers to intercept and block them. However, with server-side ad injection, the ad becomes part of the video stream itself, making it indistinguishable from the content. This means that ad blockers are less effective because they can't differentiate between ads and the actual video Link

So we know what this means for traditional ad blockers. But what about video converters and downloaded that "grabs" the video stream and converts it into an mp4 video format for example? Will it be embedded inside the video file or can it be filtered from the stream?

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If the ad becomes part of the video file which you extract then no, it will not be distinguishable as a separate part.

But that is only part of the story, when you process the video file it might be able to auto-detect the advertisement parts and remove them. In many cases the video part of the video looks strongly different from the ad part.

It might be easily detectable and removable by matching color grading, lighting and other parts. AI tools will likely have a role here by auto-detecting ads and video parts.

Technically if the timings from the ads are detecting are simply removable by tools like FFMPEG and other video editing tools which are programmable. See for example this question:

https://superuser.com/questions/138331/using-ffmpeg-to-cut-up-video

So yes, it will make things more difficult but no not impossible. It will take a bigger investment to get it done more properly.

An example tool to do it manually is here: https://videoconverter.wondershare.com/movies/how-to-remove-ads-from-movies.html for example with some screenshots to show the manual process.

Luc Franken
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can it be filtered from the stream?

If that were the case, how would it be "resolving" the issue of adblockers being able to filter out ads?

This is explicitly explained in the text you referenced:

In traditional methods, ads are served separately from the video content, allowing ad blockers to intercept and block them. However, with server-side ad injection, the ad becomes part of the video stream itself, making it indistinguishable from the content.

Flater
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The concept is really easy to understand as YouTubers have been doing this for quite a while. When a YouTuber is sponsored by a company (like the LTT segue ads), they would film the ad as part of the video and embed the ad in the actual video file they would upload to YouTube.

YouTube is basically doing the same thing. This is a gross oversimplification but they would take a YouTube's video file, edit the raw video file and append the ad into it, save the raw video file and send you the whole thing.

Is it possible to circumvent? Yeah, as with anything it is possible. However, it would be on the orders of magnitude harder to do it as reliably as we have come to expect adblocks to be. I expect a lot of false positives.