Open source royalty free is nice but getting the big boys like apple microsoft etc to add support for them is slim. h.264 is a developed open standard however there are license fees. Another downside for open source codecs is that your editing and production tools pale in comparision to the commercial codecs. h.264 is supported in every modern software, whereas open source codecs have one off tools which is hard to develop a professional workflow. Good for the geek who wants to do some video but for professional peeps it won't cut it.
As far as quality I haven't seen anything better than h.264 these days.
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