Chromium's blog informs that Google Chrome will drop support for H.264 in the coming months and will only support WebM (VP8) and Theora codecs.
We expect even more rapid innovation in the web media platform in the coming year and are focusing our investments in those technologies that are developed and licensed based on open web principles. To that end, we are changing Chrome's HTML5 support to make it consistent with the codecs already supported by the open Chromium project. Specifically, we are supporting the WebM (VP8) and Theora video codecs, and will consider adding support for other high-quality open codecs in the future. Though H.264 plays an important role in video, as our goal is to enable open innovation, support for the codec will be removed and our resources directed towards completely open codec technologies.
Google decided to pick sides, much like Mozilla and Opera, in an effort to encourage developers to use WebM. Right now, the only important website that uses WebM is YouTube, Google's video sharing service. Internet Explorer, Safari and iOS devices are unlikely to support WebM, while hardware acceleration and Flash support are expected later this year.
John Gruber thinks that "this is just going to push publishers toward forcing Chrome users to use Flash for video playback — and that the video that gets sent to Flash Player will be encoded as H.264". He also finds it ironic that Google Chrome bundles Adobe's proprietary Flash plugin, which is a great software for playing H.264 videos.
VP8 has a long way to go before becoming the codec of choice for Web videos and Google decided to make it more popular by dropping support for the competing codec from its browser. Last year, Andy Rubin said that sometimes being open "means not being militant about the things consumer are actually enjoying," but that's not the case here.