The current version of the official Theora encoder does allow you to achieve perceived visual quality comparable to that of the current h264 encoders at not that much higher bitrate in case of, at least, the typical "Internet Video" content.<p>Yes, to reach certain quality targets using Theora might mean increased bandwidth cost, but it will also be the only major cost left, for a moment leaving aside the question of adoption. That seem to be a much more predictable cost model than what MPEG LA offers. It might, as well, turn out to be a more affordable model for smaller companies not reaching the MPEG license fee caps.<p>Paying more for a better product? I'd chose the, possibly higher, price of pushing Theora adoption and Theora-encoded bits now to get a promise of a better "quality", in more aspects than just the visual appearance, down the road.