Or we could just use VP8. All the open source people are happy, the codec will quickly improve, and the vast majority of your devices with their battery efficient dedicated H.264-decompression chips will be replaced by devices with battery efficient dedicated VP8 and H.264-decompression chips within three years. We also save 200 mill.
I am sorry, but codecs don't work like regular software. Fixing bugs and issues in the encoder could make the resulting video incompatible with older decoders (decoders and encoders are not easily updateable in firmware devices such as consoles, set top boxes, mobile devices etc.).
Therefore it's important to have a proper spec in place and then improve encoders and decoders. A dump of C code is not a spec like Google did with VP8.
