Since Google Chrome dropped H264 support from the HTML video tag, Microsoft stepped up to provide a plugin that adds H264 support back, for the Windows version of Chrome at least. Microsoft has previously provided support for Firefox, though notes that JavaScript code which uses browser detection may result in the site refusing to serve H.264 to that browser agent. Since Microsoft pays for an H.264 license for Windows, use of the technology on that operating system is fully licensed.
Whilst many see the downside of H.264 as its patent coverage and license fees for the MPEG-LA, the body which holds the patent pool behind H.264, there is no guarantee that WebM is patent free. Google holds a number of patents thanks to the On2 acquisition which it has granted use of its patents under a use but don't sue clause.
The MPEG-LA, having earlier indicated that it might start a patent pool similar to H.264, has now announced a call for patents for a VP8 patent pool. It is unlikely that Google will sign up for the patents if there are no other essential patent holders; if they do, the same objections to H.264 would no doubt apply to browsers that choose not to support that on licensing/patenting grounds. Whilst Google has remained confident that they will stand up to scrutiny, it remains to be seen what will happen.
Content, hardware, software
What is missing in most of the analysis on the future of video codecs focusses only on the software aspect of computer browsers. Computer software is easily upgradable and users have a choice between competing software platforms. If a website doesn't work, they can try a different browser (or a different website).
Instead, the important issue is that of the content makers and providers. Whether a particular browser natively supports one codec or another is less relevant than the amount of content consumed and who produces that content. Although community video sites like YouTube and Vimeo generate a significant amount of data (with YouTube uploading 35 hours of video every minute), the majority of commercial content is still provided by media companies with an entrenched H.264 pipeline. Google has the power to enable all YouTube videos for WebM conversion, but still supports HTML5 for Safari and IE9 browsers. The WebM content is only of relevance for Opera, Firefox and Chrome browsers.
Most commercial sites generating content will continue to support H.264 as a primary video format, regardless of the computer browser market. The pipeline production process involves much video editing, splicing, cutting and post-processing; and the software tools all work on a standardised format. All of this pipeline has H.264 support; and to support existing Opera and Firefox browsers, video is delivered in a Flash wrapper which can decode H.264 (albeit with reduced performance outside of the Windows platform).
The content pipeline won't change until there is sufficient hardware support for WebM; nor will it change for hardware devices such as TVs, mobile phones, set top boxes and the like. Google knows this, so the WebM project has developed reference hardware designs for the decoding of WebM streams. It is expected that the first commercial chips to integrate WebM hardware support will be available in the first quarter of this year, with a Rockchip demonstration tablet decoding WebM in full HD resolution.
Hardware support is important for a number of reasons. Firstly, decoding video in software is a much more power-intensive process than decoding the video in hardware, and power is at a premium in handheld devices. Secondly, hardware tends to change slowly over time, as TVs and set top boxes rarely update firmware to introduce new versions. There is thus inertia to overcome an installed base of hardware devices with support for a new hardware implementation; although mobile phones have a 2 year lifespan, TVs and set top boxes may be in the 4-5 years turnaround. So whilst by the mid-decade there may be significant support for hardware decoding of WebM, right now, it is almost entirely in software on most systems.
Nokia
Microsoft's takeover partnership with Nokia may upset the balance in the mobile world. Whilst Android remains committed to WebM and iOS remains committed to H.264 support, Nokia has bet the farm on Windows Mobile, which has H.264 support but not WebM. As a result, Nokia may enable hardware assisted decoding of H.264 streams. However, Windows Phone has yet to make a significant impact on the mobile phone space.