You are right. Either you are using docker very wrong, or docker is not meant for this use case.
You say “getting ubuntu server to fetch it’s updated behind proxy”. You shouldn’t be updating Ubuntu from inside of docker. Instead, the system should be somewhat immutable. You should configure the version you want to use as part of the Docker file.
Same with python and keys. You likely want to install python dependencies in the Dockerfile, so that you can install them once and it becomes bundled into the container image. Then you don’t need to use pip behind the proxy.
You don’t need to re-encode the video. Look up HLS segments, which is the standard for streaming video and I assume YouTube uses it.
Each video is split into many segments, like 10 seconds long (though the duration doesn’t matter). The browser first fetches a “playlist” which is just a list of these segments. Then the video player plays each segment in order. So Google could just insert ad-segments into the video stream, and if they did it cleverly, there would be no way to determine that they were ads.
Honest question: could some of Netflix’s enshittification be because of the media industry, and not their fault? The fragmentation of streaming was the opposite of what they wanted. So maybe his point is that it’s impossible to compete because the industry is so powerful and greedy that they couldn’t hold onto their monopoly. Spotify has been able to hold onto theirs because record labels hold less power and don’t want to get into the streaming business.