Google announced a new video codec in May 2010, called WebM. This format uses Ogg Theora audio and VP8 video codecs. Google received VP8 when they purchased On2 for $106 million back in August of 2009. WebM is designed to take on the H.264 video codec that has become the digital video standard. Google says WebM is an open and free format.
Since Google does not make any money on WebM, Why have they created it? Google makes money by selling advertising. In Google's eyes, users are the product and advertisers are the customers. The more users Google has, the more they can sell to their advertising customers, and the more money Google makes. Google creates free products and services to bring in more users.
H.264 codec is the current standard for digital video. Most of the digital cameras today encode with H.264. All Apple mobile devices and many of their competitors also have a hardware decoder for H.264, which lengthens the battery life. It has also become the standard for video on the internet when used with Flash or HTML5. The problem with H.264 is that MPEG-LA owns the patents on H.264 and requires a small license fee for commercial use.
Google is the owner of Youtube, the largest video site on the internet. In order for Google to use H.264 codec on their site, they have to pay a license fee. Since Google is not a part of the MPEG-LA consortium, they don't get reduced fees or make any royalties from H.264, which effects Google's profits and its shareholders. By creating WebM and going after H.264, they are trying to reduce their costs and make more money. But WebM can't compete with H.264 if it has a license fee, so Google had to open up the format and provide it for free in order to gain support from other companies. This is the only way Google can hope to compete against the MPEG-LA consortium of big companies.
The battle lines have been drawn. There are three main areas that will make the difference in the ultimate winner of this war.
We have seen a similar conflict between formats when the open source audio codec Ogg Vorbis came out to compete with MP3. Ogg Vorbis is a free and open codec and is similar to the one used inside the WebM format. MP3 is a proprietary format, but still is the most widely use audio codec today. The Ogg Vorbis could never compete because it does not have a corporate sponsor like WebM does. Other proprietary formats have risen, like ACC, to compete and have had more success. Yet, MP3 still dominates in all areas except on the Apple platforms. Will WebM become the MP3 of video or forgotten like Ogg Vorbis?
The battle is just beginning and won't end anytime soon. For now, H.264 has the upper hand and a major head start. Only time will tell if WebM becomes the standard or just another forgotten format.
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