Anyone who works in online video has likely been waiting for this story to hit. As part of their Google i/O conference taking place in San Francisco this week, Google announced their intention to open source VP8, which they acquired with the purchase of On2 last fall. This announcment is part of a larger movement dubber WebM that was also announced at the show and will be a driving force for video in HTML5 (if i'm following this all correctly). In conjunction to the announcement, Adobe's CTO, Kevin Lynch announced that they would be adding support to Flash for the new codec.
So where does this leave H.264? It certainly means there is legitimate competition for it for the first time since VC-1 gave up the ghost, in terms of adoption and popularity. Apple is fairly firm behind its 264 support and is unlikely to sway much towards VP-8, so this codec and its adoption is likely to have a polarizing effect (are ya with us, or agin' us?!?!)
Not that anything is likely to happen right away, Google still as to officially release it, support has to begin to creep into both the encoder market and the player/platform side, so for now H.264 is in a strong position, but at least we know the front the next battle will be waged on. It will be very interesting to see what happens to the H.264 content on YouTube's site. As a further part of the announcement, Google stated it was converting its entire catalog over, but it was unclear to me whether this meant the h.264 content would be discard (leaving iphone and iPad playback dead in the water).