The debate is far from over. YouTube and Vimeo may have changed one aspect of it, however unlike in years past when the fight took place almost entirely within World Wide Web Consortium working groups, this time it is being fought in public. Consequently, more people are getting a look at what HTML 5 video is in practice, and can better understand the difference between the HTML element and video format delivered, which can only be a good thing.
I am not so sure. It is pretty clear that using H.264 for Youtube is beneficial for Google, since it potentially gives Chrome more market share now taken by Firefox and Internet Explorer. And given that 90%+ of the market does not care about licensing of video codecs, as long as their browser/system can play Youtube videos, I am not too positive that a lot of people now get a better feeling of HTML 5 video in practice. Let's call it by its name: it is a major blow for Theora.
What I expect to see happen: if the HTML5 standard does not specify a codec, H.264 becomes the standard. And then we will see many years of grey areas: GNU/Linux users will use free H.264 implementations (like DeCSS and MP3 encoders previously). No end users get sued, some companies do get in trouble (especially when they are competing with H.264 patent holders).
At the moment, I can only see two positive turns of events: 1. swpats get practically killed in the USA or EU, 2. there is so much bad press for H.264 that the will make licensing looser, and allow for royalty-free use in FLOSS software. (2) would be quite nice, but not perfect, (1) will stop all of this madness, and will be very good for innovation and business.
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