This deals a major blow to the Google-led WebM Project project dedicated to unseating H.264 as the primary source of Internet-based video.
The fact that the popular H.264 codec--widely used on sites like YouTube--is not an open platform and can involved royalty charges has been a major point of contention for Internet giants like Google, Adobe, Mozilla, and Opera. So much so, in fact, that those four entities--among many other sponsors--came together several months ago to found the WebM project . This project is "dedicated to developing a high-quality, open video format for the web that is freely available to everyone." Now that the popular H.264 codec is available for free, the future of WebM is unclear.
The H.264 codec is a very efficient compression algorithm for encoding video files--and compression is espectially important when it comes to Internet-based video. The less bandwidth consumed, the better in that environment. Previous codecs gave content publishers the difficult choice of high-quality (with very large files) or acceptable file sizes (with low quality). The advent of H.264 and the efficiency gains therein allowed sites with heavy usage to publish videos with increasingly high quality without taking as much of a bandwidth hit. In fact, without H.264 it's unlikely that Internet users would have seen the relatively recent explosion of HD content on sites like YouTube.
H.264 and the HTML5 movement
The heavily multi-media environment of today's Internet requires the use of many proprietary technologies, from Adobe's Flash to Microsoft's Silverlight and many other browser plug-ins. HTML5, while still very much a work in progress, gives promise to change that--allowing web developers to insert video and animations without relying on expensive licensed tech.
The problem with H.264 when related to HTML5 is at least two-fold. One, the very fact that--until recently--it itself was a licensed technology flew in the face of the "open" web envisioned by proponents of HTML5. The second is that, depending on which proponent of HTML5 you talked to, H.264 was or wasn't supported. Both Apple and Microsoft support H.264--and H.264 alone for HTML5 development, because it represents superior technology.
With good technology and two strong corporate backers in Apple and Microsoft, was WebM doomed from the start? No, but with the permanent moratorium on royalties put in place by the MPEG licensing authority, the future of WebM's mission is quite unclear--because it's mission of a high-quality, open video format that's freely available to anyone has now been delivered by the competition.