If rolled out widely, this would make web browsers and third-party YouTube clients without a DRM license unusable for YouTube playback, download, etc. This would include almost all open-source web browsers and almost all third-party YouTube clients. Archive link to reddit post about this
And you vastly underestimate the value Youtube would lose if the tech-savvy segment of their audience went elsewhere.
Those left behind are a different market. Youtube creators would have to dumb themselves down even further, driving even more worthwhile content off the service. Soon Youtube would be the Facebook of video sites, geared towards a shrinking population of people too old and stubborn to move on.
I say YT should absolutely shoot themselves in the foot like this.