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There are licensing costs built into OSes shipping h264, devices built with HW decoders, online movies rented with it, etc.

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So by having VP8 I save a few cents off the price of an OS upgrade or new device.

And in exchange I get significantly poorer quality video.

For every copy of Windows 8 Basic sold, Microsoft saves $2 by not including. That adds up!

http://www.extremetech.com/computing/142796-how-to-play-dvds...

Nothing is stopping you from paying for h.264 for better quality (although the difference is far from what you try to portray).

Meanwhile those who doesn't want to pay for the priviledge of the better quality h.264 offers (and likely h.265 in comparison with vp9) will be able to use a free codec, hopefully one which will be standarised under HTML5 and thus supported across all HTML5 compliant software.

See, it works out for everyone.

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