A key factor in the web’s success is that its core technologies such as HTML, HTTP, TCP/IP, etc. are open and freely implementable. Though video is also now core to the web experience, there is unfortunately no open and free video format that is on par with the leading commercial choices.
VP8, a high-quality video codec is released today under a BSD-style, royalty-free license at http://www.webmproject.org/. The WebM project is dedicated to developing a high-quality, open video format for the web that is freely available to everyone. The WebM launch is supported by Mozilla, Opera, Google and more than forty other publishers, software and hardware vendors. WebM consists of VP8 video, Vorbis audio and simplified Matroska file format. Check out what Mozilla, Opera, Google Chrome, Adobe, and many others below have to say about the importance of WebM to the future of web video. WebM is very promising technology. Google grants a perpetual, worldwide, non-exclusive, no-charge, royalty-free, irrevocable (except as stated in this section) patent license. Google’s YouTube already support both the video tag in HTML5 and either the h.264 video codec or the WebM format (with VP8 codec).
There are still some downsides. VP8 Is Not As Good As H.264, On2’s Quality Claims Unfounded. Even if VP8 is worse than H.264, being patent-free is still a useful attribute for obvious reasons. According to The first in-depth technical analysis of VP8 says that the problem of patents could be rearing its ugly head again because is simply way too similar to H.264, almost like “H.264 Baseline Profile with a better entropy coder”.