Wow the buzz getting louder recently, some days ago I just found really nice (and pretty damn small) open source flv player http://flv-player.net/ but now everyone is talk about HTML 5 video already. Started by IE9's plan to support H264 and AAC. IMO that's good decision though I hope at least vorbis get supported, cause it (ogg) undoubtly kick AAC's butt at EVERY bit rate comparison.
That tag will eliminate requirement to install flash player in most situation but that's not the only attack from HTML 5. When SVG & SMIL matured, HTML 5 is serious contender to Flash technology entirely. We'll wait when that time come...
The video format itself seems has been an internal decision of each browser. For example webkitgtk will rely on Gstreamer which stand for the whole multimedia framework ever imaginated (from midi, video, sound and a lot more). Even with Flash player adoption to H264 some time ago HTML5 video is unavoidable, Adobe eventually given up for sure and preparing a decent HTML 5 editor instead.
Good thing not much effort has ben put on creating open source alternative for Flash IDE. Inkscape in fact is on the right path (going to SMIL).