They claim that everyone would have otherwise paid for a subscription to watch it legaly. But that is simply not true.
When you could buy either variation of pasta in the store, where there is hundreds of boxes stapled, so price and availability are certain, you can speak of opportunity costs.
But here the elasticity is extreme. Many people will not buy this if it costs anything at all. Most probably would, if there is one service with reasonable prices where they can watch everyting. Some people are probably not able to watch a legal stream at all, because it isnt licenced to their country.
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.
That is something you just cannot avoid with a new medium. Eventually there will always be professionalization. It just sucks that youtube now just gives us the same shit over and over instead of making it easy to find new creators, like it used to be.