Introduced officially at Google I/O 2013, the search giant is pushing for quick adoption of their new open source VP9 video compression standard over the current H.264 codec.
VP9 is an open source and royalty free video compression technology under active development by Google with which they hope to replace the popular H.264 standard. The development of VP9 begain in late 2011 with two goals in mind, to provide a 50% reduced bit rate compared to the older VP8 codec while maintaining the video quality, and also optimizing it to the point that it becomes superior to the latest High Efficiency Video Coding (H.264) standard. We have to keep in mind that H.264 is pretty old now and the same standard is getting an update to H.265, which as much as doubles the data compression rate compared to the older H.264 standard.
Google added initial support for VP9 in their ever-popular Chrome browser with version 25. The company has announced the finalization of VP9 for June 17, 2013.
"If you adopt VP9, as you can very quickly, you'll have tremendous advantages over anyone else out there using H.264 or VP8.You can save about 50 percent of bandwidth by encoding your video with VP9 vs. H.264." – Ronald Bultje, engineer, Google
Google has many business reasons for quickly rolling out their new standard. With VP9, thanks to reduced bit rates, the company can save tremendous amounts of bandwidth (and money of course) that they have to spend on catering YouTube videos worldwide. A 50% reduction in bandwidth requirements is really a lot considering the sheer number of videos watched daily on YouTube. Also, users will consume much lesser data while streaming videos (useful for those with capped data usage packs).
Google introduced other bandwidth saving techniques at I/O 2013, most notably the server side compression technique (much like Opera Turbo) on their Chrome browser. We strongly suspect this to be a result (direct or indirect) of their new Zopfli compression algorithm that promised to create smaller (compressed) files and speed up the web in general.