And so it begins. The battle between the H.264 and WebM video codec.
Google's On2 acquisition and the subsequent open-sourcing of the VP8 video codec has created a formidable competitor for H.264. Formidable not because WebM is technically superior to H.264 but because now there is a free alternative to the proprietary and licensed H.264. WebM is free, underwritten by Google, and a proven web-video delivery veteren -after all, Adobe Flash has used On2's codecs for web video delivery over the years.
There are several things going for H.264. First, it is entrenched in several video delivery formats and standards. For example, Bluray uses H.264 to encode video. Millions of Bluray players will become obselete if WebM is used instead of H.264. My two cents are that this wont really happen, instead, newer players will incorporate the possibility of decoding WebM video also. Even as I write this I am aware of several hardware manufacturers who are incorporating the WebM video decoders into their ASIC hardware. But I am not assuming that things like the Bluray standard will be changed, on the contrary, there are other emerging media delivery and storage standards that have been frozen with H.264 being selected as the codec of choice. Standards take years to change or deploy and its very unlikely that they can suddenly adopt WebM instead of H.264.
In the mid-term WebM will defeat H.264 where there is a (easily replacable) software decoder and soft-media. By soft-media I mean video that is not burnt onto read-only media like Bluray disks but instead exists, say, in the form of a web-downloadable video on a server's hard-disk. The economic compulsion of having to pay the H.264 licensing body per-video download and per decoder shipped compared to the free (as in air) WebM alternative shall edge out the former. I suspect web-video delivery platforms like You-tube will lead the charge because (1) The number of videos being downloaded are huge and, (2) Their average revenue per video is miniscule, and each WebM download instead of H.264 download saves a few cents in licensing fee.
A black-knight for the time-frame question will be the innovation in H.264 vs. that in WebM. If open-sourcing WebM has the desired effect of creating a better and more innovative codec in the future then WebM could gain on H.264 faster. But I am sure that the H.264 camp won't be sitting on their palms all this while! Video codecs use advanced algorithms and developing such concepts needs big investments (R&D). Will backers of WebM bring that kind of investment to the table in the interest of improving WebM when there is no direct revenue coming back to them?
Another thing that is going for WebM is the push toward virtualization in consumer electronics (away from the conventional ASIC approach) in the coming years. This means that future hardware (such as future Bluray players) may be capable of running multiple upgradable decoders rather than being tied to a specific ASIC implementing a specific decoding algorithm for a specific codec. That may just break the hardware dominance of H.264 over WebM. As a consumer I would prefer to hedge my bets and buy a virtualization-capable decoder rather than being tied into one video codec via an ASIC decoder.