Edit: To clarify:
Is it even possible, financially speaking, to keep adding storage? I mean, advertisements don’t even make a lot of money, is the indefinite growth of server storage even sustainable?
Or will they do what Twitch does with old content and just delete them?
YouTube is known to reduce the quality of old videos. The resolution is often the same (e.g.1080p), but the image quality is way worse compared to when those videos were new. They’re probably doing it to reduce their storage cost.
They still keep the originals. They’re degrading the quality of older videos for bandwidth reasons, not storage.
Also, it’s not because of the price of bandwidth: It’s because they can use up so much bandwidth in a given region that they can cause slowdowns (e.g. hogging too much of what’s available).