I am not sure if it will work out like this though. The amount of ads they are forcing down peoples throat is isane. Eventually it will make people consume less videos and with that less ads overall.
Sure, could be - but keep in mind that they have all the relevant usage data at hand. Any decrease in service popularity among users (or indeed any kind of user behavior) is immediately visible to them. They have the means to know exactly what annoyances the market will bear.
And considering that YouTube still holds a de-facto monopoly on video discoverability within the entire anglophone internet I feel like it’s safe to say that the market will likely bear a lot more annoyances :P