Realistically though I don't think this will lead to anything competitive at all, I really wish I am wrong but I just don't see it.
Just avoiding trampling on MPEGLA's huge patent chest would be a massive feat in itself, finding/developing compression techniques which aren't patented and capable of improving on the likes of HEVC while still be performant enough to be realistically usable strikes me as 'mission impossible'.
Again, would be so happy to be dead wrong.
Either explanation gives Daala a fighting chance.
A lot of bribes to implementers, probably.
However, such a fixed purpose decoder is going to have to compete in die area with other video decoders on the chip. I feel that a better solution is DSP-based video decoding - examples include Broadcom's VideoCore. This is actually how most video decoders already work, but you generally can't edit the code. These decoders give the speed and low power of a dedicated hardware decoder due to special-purpose function blocks, but are still flexible enough to decode different video formats and include bugfixes after the hardware has shipped.
I guess AVC will fade out over the next 5-10 years and HEVC will dominate from a couple of years time until 2025 or so unless something computationally feasible can encode to about 50% file size earlier. Xiph needs to be demonstrating something in about 2022 that encodes to 50% of HEVC size with computational complexity that will be feasible in 2025 and that complexity has to be manageable in (mobile) hardware and in software.