Who will? Anyone who wants to serve video without interstitial ads. Think about the world before Youtube-like sites. How did we embed video? Often times hosted on our own servers. If I want to serve up a dynamic video for example, right now Youtube-like services do not allow me to do that. I think dynamic video is a great use case for the video tag e.g. splicing a use photo into video.
It seems to me that unless the ad is prepended to the actual video file then using javascript we can tell when an ad is playing and kill it/skip to the "real" content. On the other hand the average user probably does not have the expertise to kill ads, so maybe the point is moot.
Yes but someone can easily make a browser extension that kills it for them.
Or use firebug and inject javascript into the page.
I think people stopped embedding videos and started using third party tools because it makes it easier. Third party tools will always make it easier. No need to worry about bandwidth, file space, etc (even if the cost of these items are going down). And as long as these tools make it easier, these tools will probably want control of their players and will want to put ads in them.
It seems to me that unless the ad is prepended to the actual video file then using javascript we can tell when an ad is playing and kill it/skip to the "real" content. On the other hand the average user probably does not have the expertise to kill ads, so maybe the point is moot.