You have to read this! This commentary is written by a fifteen year old blogger who has a great look into the whole issue.
H.264 is an open standard. It was developed by a committee, standardized, reviewed by many engineers and developers for multiple companies and has been standardized for use with a multitude of containers and devices. However, H.264 is not royalty free. Software patents in many countries restrict the distribution of software that utilizes the codec to those who pay the MPEG-LA.
VP8 is not a standard. It was developed secretly by a single company, and until recently, had only a single working implementation. The public wasn’t open to collaboration on the specification until the bitstream spec was frozen, including the bugs that existed within. Now, the source code and reference implementation are available under liberal licenses, and all the related patents are irrevocably royalty-free.
Posted: January 25, 2011