It really all started when Google took over. I think that Youtube was never really the same again, as it had previously been totally independent. Yes, it is still run by the same person, Chad Hurley, but the fact is Google now have a massive influence on how its run.
I really don't blame Chad Hurley for selling and later running (he resigned a s CEO in October 2010), but I still think that it would have been nice for him to keep it a bit longer and make improvements. A bit like Mark Zuckerberg is doing with Facebook, but except that he has no intention at all of selling.
Why has it been a downfall? For the simple reason that by "upgrading" stuff, they are actually just complicating things. The new layout update they did a few months ago for example (the one where they changed the subscribe button from the side to the top). It hasn't greatly improved anything, and I have a funny feeling that it takes several seconds longer to load than the old page, just because it's more complex and complicated.
The final thing that does annoy me, and it might surprise some people, is all the annotations they now allow you to put in the video. Now what I really hate is that some people go way to far with them and I don't get when people give you another link to their channel/to subscribe in the video. There are already bloody obvious links for both of them on the page. Nobody needs reminding.
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