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There are several reasons tubes work.
If your video gets embedded, usually clicking on the video will go to sponsor, possible sale (depending on who embeds it and where)
If your video gets linked by URL, the surfer will see the large ad above the video first. I generally try to make my ads look more like a skin, though my script limits this ability a lot.
Think of each videos watch page like a gallery on a tgp, only viral.
Against much belief, I make no money off my cams ads in the footer, and I have had several videos embedded and linked to already. And have picked up quite a few joins in its short life.
The fact that most tubes use tags, you ca target your advertising to send surfers to whatever niche or sub-niche you like. The fact that each channel is linked, makes it easier to put a link in the bottom of a gallery or a blog post.
I am still new to this, but I do know that I have spent $10 on a domain, $30 for a years hosting, with great staff. (everything is sponsor hosted except a handful of videos, so no worries of crashing anything until I get ubers of traffic). And I have made over $200 in the first month with very little, very targeted traffic (I link mostly to categories and channels as stated above... rarely to the main page).
Let's not forgt about community, or web 2.0 features like comments and ratings. That is something that really gets the surfers involved.
It's worth leaving on your list, IMO. At least for now.
BTW, I have already had over 100 SE hits for my domain name or variations of it, which would be probably the only reason for anyone to search the term. So I am already getting word of mouth, it is less than a month old, and honestly my tube is pretty lame.
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