In a rather unexpected move, Mozilla has broken out of its shell and said that it will not follow Google's hypocritical WebM strategy anymore, but shift its attention to H.265 video, especially on mobile devices.
What makes this announcement so special is the fact that H.264 was labeled the bad boy among video formats not too long ago, as it is protected by a myriad of patents held by companies such as Apple and Microsoft, and therefore is under a constant threat of potential licensing fees. Yet Mozilla now feels compelled that H.264 is the way to go. CTO Brendan Eich indicated in a lengthy blog post that Mozilla isn't happy with the way Google has handled WebM as a full alternative for web video and has not followed through with its promise, which has left Mozilla under a threat of being abandoned in no-man's land between Google and Microsoft.
According to Mozilla chairman Mitchell Baker, not supporting H.264 "has not worked" and Mozilla has decided to ship a product that people should want. "Our first approach at bringing open codecs to the Web has ended up at an impasse on mobile, but we’re not done yet," Baker wrote. "We shouldn’t beat ourselves up for somehow failing to live up to Mozilla’s values. We’ll find a way around this impasse."
In a much more detailed post, Eich lists the reasons why H.264 is the only option for mobile at this time and indicates that desktop may be impacted as well.
Specifically, Mozilla is disappointed that Google has not followed through with its promise to from January 2011 that it will drop H.264 in favor of WebM from its browser. While Mozilla "fought against the odds" and "carried the unencumbered HTML5 <video> torch even when it burned [their] hands", Eich said that Google followed a two-way road in which Chrome still supports H.264 video and Firefox relies on Flash as a fallback option for H.264 video. That is an inconvenience on desktop, but a problem on mobile, because Adobe announced that it is not actively developing Flash for mobile anymore. Both the default browser on Android and Chrome for Android run H.264 natively.
Eich believes that Google has no reason to drop H.264 on mobile devices, because that would impact their ability to gain market share as H.264 uses "far less battery than alternative decoders", Eich said. For Mozilla, which follows a core platform strategy for all Firefox browsers, there is suddenly the question whether to support WebM in favor of H.264 across all its products. For mobile, Eich says that "H.264 is absolutely required right now to compete on mobile", but there is plenty of room to speculate that he has similar thoughts for H.264 on the desktop browser as well, even if the option to wait do to available Flash development is clearly there. He promised that H.264 support won't cost Firefox users money and it appears that he is counting on an expiring patent before any payments would be due anyway.
For Google, Mozilla's complaint is a dent for the credibility of the Chrome strategy and the pro-open source campaign. If Mozilla drops WebM entirely, WebM is practically dead. Firefox isn't significant in market share on mobile devices, but it is the 25 percent wild card on the desktop. Google will only be able to help WebM survive with the support of Mozilla, which gives Google/Mozilla about 55 percent of the total browser market (according to StatCounter). Without Mozilla, WebM drops to 30 percent and H.264 rises to 70 percent of the market.

How are these sort of things overlooked?
Looks like another codec war is brewing...
I'm almost finished with converting a few 100 MPGs to OGVs.I have an external HDD with portable FireFox and with HTML5 I have made a nice looking portable videoplayer that will run with no troubles on any Windows PC.
Well it looks like theora will lose (with webm), so I should start converting again, this time to MP4 I quess.
x264 is an encoder and not an encoder/decorder: means you can't use it for video playing only for encoding.
It's quite simple. Not all OSes have h.264/aac/mp3 codecs installed on the computer. ffMPEG in the future might experience licensing issues, expect in those countries that software patents aren't enforced.
Win7+ has it, it's easy enough to add to Vista and XP, OSX has it, and Linux usually has an option to install proprietary software that usually includes mp3, DVD, h.264 (FFmpeg and others), Flash etc.
I find it unlikely that FFmpeg will face any licensing issues as it is so widely used (even in commercial programs) and no action has been taken so far on any of the large amout of codecs they have.
Anyway, only consider it if you still have the original sources. Converting lossy-lossy once is bad enough (such as converting a DVD to something more efficient). But doing it again, and from a somewhat modern source like Theora? You really start losing a lot of information, which will impact quality something fierce.
I have also found that most mkv files use h.264 and aac, although sometimes they have ac3 (Dolby Digital), mp3, or FLAC
What I meant was that the WebM container (.webm) is based on Matroska. The codecs behind WebM being VP8 video and Vorbis audio.
http://matroska.org/news/webm-matroska.html