I can understand extreme cases, like some sort of disputed IP where their contact to sell the content turns out not to be with the actual rights holder, resulting in no longer serving the content (with an unconditional full refund). But past that they should be legally required to host the content until the heat death of the universe.
Backwards compatibility forever sounds great, but the technical debt eventually becomes a giant fucking limitation on improvement. They chose not to stay backwards compatible for a reason.
As far as I'm concerned skippable ads are the same thing as any other ad. I use auto play for a reason and it's because I don't want to fuck with the remote every episode.
Obligatory "check your library". It isn't "literally anything ever published any time" like piracy is close to, but in a lot of places (at least in the US), there's a pretty meaningful selection of content you can borrow perfectly legally.
The rest is the "safe harbor" provision of the DMCA. Effectively, sites aren't liable for user generated content if they respond to official DMCA takedown requests in a timely manner. YouTube also goes beyond that to directly work with copyright holders to preemptively remove infringing content with content ID, which scans everything for violations, and their own tools to report infringement. They don't need to do that for the DMCA protection, but it's probably cheaper at their obscenely large scale.
They could have not given you root access and forced you to install your own OS for it to manage things that aren't on Steam. They could have locked the bootloader and refused to install anything they didn't sign.
Neither would violate the license provided they made the source available.
The risk is that the business fails. There are no "sure thing" investments, especially at higher returns.
Ask him how his business can fail. If he doesn't give you a variety of possibilities and ways he's hoping to prevent them, I'd be very worried that he's overconfident and not prepared for difficulties.