1) All browsers with Flash players 2) Any "web connected" set top device/TV 3) About 50% of HTML5 video compatible browsers
With this move by Google #3 falls to 25% or less. And they're looking to add WebM support to #2. At some point consumer demands you support both because their shiny new Macbook Air/Chrome OS tablet/TV doesn't play video. Good move by Google to justify their $125M investment in On2, but end users will end up being inconvenienced as the splintering continues.
This is just going to feel like a regression to most end users who really don't give a crap about who holds what patents.
Firefox has something like twice the browser share of Chrome. If you were OK sticking Firefox users with Flash video, I don't see how that's hugely different from sticking Firefox AND Chrome users with Flash video.
If you want to support all modern browsers, you used to have to do two encodings. After this announcement, you will still have to do two encodings.
1) All desktop browsers play WebM natively or via Flash/OS codec. 2) (perhaps no change, as I don't expect GoogleTV to go anywhere) 3) Majority of HTML5 implementations, and also market-share wise, support only VP8/Theora (with Google flipping the switch it's already the case)
In that landscape it might make sense to encode WebM for desktop and low-res H.264 for mobiles.