You're absolutely right with the advertising aspect. YouTube is not simply a video hosting platform. It is also an advertising platform.

YouTube's dominance is not because video is impossible to host but because YouTube takes care of the advertising/revenue aspect for content creators. Any competitor would need to provide a similar service, and that's hard to do at the same level when you're not run by the world's largest advertising company. A serious alternative to YouTube would need to draw creators like YouTube does, and you need some sort of built-in way to (probably economically) incentivize them to create videos and put them on your platform.