In the end I don't blame them too much, though. They seemed to have tried to take an even bigger stance pro-VP8, than Google itself, at least publicly. Google could've made the WebM player the default one for Youtube a long time ago, and only leave the Flash one as fallback, much like Apple took the stance with h.264 and gave up on Flash years ago, and then jumpstart the momentum for VP8. But they never did that. Mozilla alone certainly didn't have the power to turn the whole web towards VP8. I think Google could've done it with Youtube, especially considering all their videos are already encoded in VP8. VP8 is also the chosen codec for WebRTC.
Here's the money quote from none other than Andreas Gal:
"I do believe this war is lost. Just look around. Almost none of the content users want to watch is available in WebM. The only reason desktop is usable is because of Flash, a proprietary plugin, playing video for us (in H.264, mostly). Even Google, supposedly a proponent of open codecs, never fully converted youtube and never dropped H.264 from Chrome. Taking a principled (I would at this point prefer 'stubborn' I think) stance on H.264 won't change reality. It just hurts us and our users.
Firefox got to the point where we are on desktop today by embracing reality. In the early days we started supporting IE-isms like document.all that were god awfully ugly and non-standard. But it was needed for compatibility so we can give people a usable web experience. The web uses H.264. Thats an unpleasant fact, but its a fact. We have to support it whether we like it or not, so we can be around for the next round and continue to influence the web for the better."
So to say that they "gave up" isn't the whole story. Mozilla recognized that this wasn't a hill worth dying upon, and are willing to make sacrifices in order to remain relevant in the pursuit of keeping the web open.
On top of that, Adobe promised support for WebM in Flash and never delivered (so sites couldn't use WebM with a Flash fallback for other browsers), and Google (who made WebM in the first place) promised to drop h.264 in Chrome and never delivered.
That said, Mozilla will continue to have WebM support, and fight for WebM and other open standards in WebRTC (in which it matters even more because that standard includes encoding).
Take a look at http://hacks.mozilla.org/2012/03/video-mobile-and-the-open-w... for an official statement from Mozilla on this.
Besides, is it really the browser's role to dictate the video formats of the web? I would hope they would support everything practical to support and let the sites themselves choose.
And how practical is it to support a for-pay format when you're in the business of giving your product away?
But if they wanted to pay the decoder license fee for every one of Mozilla's 400 million users, Mozilla has annual revenue of more than $100 million, and the most that they would be charged is $6.5 million . However, on Windows and Mac, this is not necessary, so they would only need to pay the $0.20 to $0.10 per for Linux.
Then there was the quality issue. VP8 Sucks. It sucks less now but it is still inferior to x264 encodes.
Then there were the cost benefits of converting to Vp8, no bandwidth saving, more storage cost, and other resources for converting its existing library of video FAR out weight the benefits of using a "not yet proven" patents free video which gives not quality or other improvement.
Dont get me wrong, I am not against Vp8 or Patents Free Video Codec. But i am just being realistic here. It is going to be hard, but at least Opus has proven you can actually create Best of Current Audio Codec and patents free. And Mozilla are already working Daala ( Code Name, and i Hope it remains as a code name only ) aims to have superior performance to h.265.
Instead we're going to be paying to watch H.264 encodes that "suck" compared with the state of the art for the next 10 years just as we're still paying to watch MPEG-2 and listen to mp3 codecs that "suck" compared with the state of the art from 10 years ago.
And you know what? That sucks.
Only it doesn't work that way.
Convince us with a better codec, not with politics first and the codec "later" (and if we're lucky).
The same people that shot it down as a standard web codec have been recycling the same FUD for this debate. The last I recall was Google sending this rather mysterious email the day before the decision was supposed to be taken:
"Google understands that concerns have been raised within the IETF RTCWEB WG in regards to VP8 IPR. We endeavored to properly address these concerns in time for this IETF meeting but did not meet the deadline.
We hereby commit to addressing this by the next IETF meeting in Orlando. Our proposal will address prevalent IPR issues.
Google believes strongly that the VP8 codec is the best technical option for a mandatory to implement codec.
We therefore kindly ask to postpone this decision and hope the workgoup will take this opportunity to make progress on other vital topics."
It's the content, not the hardware support. No content provider cared or will care for VP8 when only Firefox is championing it (which it was).
And it's not like Firefox enjoys a steady market share, so it can afford to insist on principle. They have a lot to do if they don't want to continue the downward slope.