AV1 is supposedly a "free" format, but I wouldn't bet my business on it. The patent situation is unclear. https://en.wikipedia.org/wiki/AV1#Patent_claims
Except that's not how legal cases work.
Just because all three of you infringe doesn't mean lawsuits will result for all three.
It's quite likely they would allow Youtube and Netflix to continue infringing to promote the growth and adoption of the codec whilst they go after smaller players who won't be able to put up a fight.
You can try and invalidate the patent but in a situation like this where the patent holders are serious companies and legitimate innovators it's unlikely to get you far.
And yes it is very common to bully lots of smaller players rather than get into an expensive protracted lawsuit with a large one.
In a lot of jurisdictions a 3rd party can join a lawsuit, it's called an intervention [1].
I'm not fully aware on US law, but e.g. in NL all large internet providers joined a lawsuit as defendants when a copyright enforcer wanted 1 to block The Pirate Bay.
I am not aware of this being the case for either company.
This is why grassroots-scale efforts to defend against patent trolls are so important - you absolutely have to prevent precedence case building for patent trolls or it becomes so much harder down the road.
Notice also that the encoder implementation is as important as the codec format itself for the quality/bitrate ratio.
Paying off _some_ patent holders doesn't put you in the clear for all the others. No licensing pool indemnifies you against all other claims. There's never an exhaustive list of patents that apply to any particular product. "Competing product's patent situation is unclear" is always true, no matter the product (unless it's at least some 20+ years old, which should make it _somewhat_ safe because applicable patents expired). Bringing it up to favor one product over another is FUD though because it's true for the other product just as well.
The patent regime is an extortion racket: patent offices hand out exclusive rights for money, without accepting any responsibility that these rights are warranted. They don't even guarantee that their own catalog is free from conflicting rights.
Where are you getting that information?