They could do it on a few clients then ship the data back to the server. If they’re resourceful those clients don’t even need to be watching the video! (they could send it and compute the output in the background of another stream)

But that's a distributed problem now and those use up valuable developer time, which we know is the most important resource in the world...

Yeah, but if google solve distributed processing just imagine the cost savings elsewhere (imagine involuntarily crowdsourcing video encoding, it would save them millions)