This. It's why in-stream ads were so straightforward to implement for Twitch too. Can't fast forward a live stream.
If you're willing to buffer a few minutes of video, you can work around this. Tivo is a decent example of how this has been done in the past.
Oh yeah, that works. Cable TV + Tivo is a good analogy for all of this.
Even if they try to prevent that, with a modified client, you can skip anywhere in a video and there's nothing they can do about it.
That requires them to pre-serve you the bits for the part of the video after the ad, which they aren't going to do.
Unless they want to completely break the ability to seek in the video timeline, regardless of ad placements, that's not going to work.
It already behaves this way if you aren't blocking ads. If you seek too far ahead in a video with mid-video ads, it'll show an ad before playing at the timestamp you selected. If they want to prevent ad-blocking, they can do the same thing except not serve the video ahead of time.