Google generates revenue from YouTube by artificially hindering the YouTube app by preventing it from playing videos in the background or with the screen off unless the user pays for a monthly subscription.
NewPipe removes that artificial barrier.
The Google search term "how do I play YouTube videos in the background" yields over 2 billion results[1]. There is an incredible amount of demand for this feature alone.
[1] https://www.google.com/search?q=how+do+i+play+youtube+in+the...
But if it were actually possible to build a competing store, you would see companies offering features, innovations, and value that you will never see from Google or on Google Play. That's the free market.
I know I would install a store that was actually curated (not like what Apple and Google claim) with apps that have no malware, maybe no ads, etc. There are a lot of potential business opportunities in this space that cannot possible succeed today with the current anti-competitive practices of Apple and Google.
The only way I'd see alt stores being successful is if first-party stores were banned. This is pretty much what has happened with Android in China, but the UX is a mess. Users have to install a half-dozen stores, with each store taking up a pretty significant chunk of system storage and resources and with each store managing updates independently (which often creates weird conflicts when the different stores interact with each other). And for all that trouble, it's not even as if these stores charge developers any less than the App Store and Play Store do. Why would I as a consumer voluntarily sign up for this?
The value in the Play Store and App Store is that it is a single, centralized repository where users know they can find and manage all of their software. This significantly reduces the cognitive load associated with software installation.