Yes, businesses that already use h.264 and flash will probably continue using them. But the bootstrapped websites and startups will opt for the free stuff at least initially, and of all those bootstrapped startups some will be successful enough to make some noise. And then some of the established companies will have cost cutting rounds and will look at those license fees and think about whether they really need to pay them when some of their brand new competitors aren't paying them. At this point the iPhone will start looking bad for not supporting the newest and coolest video startups that are supported on android and Jobs will eventually cave too and add WebM support to the iPhone.
Everything in the web thus far has gone towards the lowest cost and easiest alternative that is still effective, and this will not be different.