Also software decoding of AV1 is already fast enough, so specially what game streaming people need is the AV1 hardware encoder
https://openbenchmarking.org/test/pts/dav1d#results
So this announcement is specifically about encoding.
On what codec settings?. IMO h256 and AV1 are extremely close depending on individual, and still experimental, codec tweaks.
MP3 coding was near garbage at 128kbps, but over the years the codec community managed to make 128kbps significantly better audibly without changing the format
Next gen h256 coders will likely copy whatever non-bitstream optimisation they can from AV1 coders, and they will be a near match again.
Not only is that speculation, but more importantly they will not be copying the licensing terms of AV1.
AV1 was supposed to be "on par" with h265 but has jumped ahead by a bit and will likely improve for quite awhile until AV2 is worked on. Will it reach VVC levels? Probably not. But it will certainly be better than h265/HVEC.
Source for size comparisons: https://www.cambridge.org/core/journals/apsipa-transactions-...
I look back at MPEG-1 Video CDs and it is unbelievable how incredible a video image you could now produce in the same 600Mb storage.