I agree with you. This was similar to an oversight by Jason Njoku when he shifted focus from YouTube to float his own site. YouTube was serving ads to his contents and sharing revenue so he should have focused on sourcing and development of content.
The advertising model is a good strategy for markets where disposable incomes are very limited and contents are not really premium like 90% of Nollywood movies.
Iroko started as freemium, remember? It didnāt work because CPMs in Africa are too low
Here are my opinions on Video-On-Demand or more generally media - on - demand that includes Youtube, Netflix, Spotify e.t.c
Ridiculously capital intensive to do wellā¦
Hosting video content (considering the fact that video is video 
)
server costs, storage & shit ton of headaches i dont even want to start thinking about
Creating original video content / Paying licenses (tip: netflix spends billions years on creating content & spotify is constantly bn harassed by celebrities over royalties)
Getting & keeping paying customers (when i can easily download the most interesting videos on the internet & then pass it on to friends who will never even have to download again)
Video ADS might even perform better as they can be more engaging but they are a LOT harder to optimize because once again video is videoā¦ bots cant know whats inside a video
Netflix & even Youtube will endup being immensely profitable definitely because
they SERVE THE ENTIRE WORLD (i.e economies of scale)
They got enough VC cash to even implement