Matt Asay doesn't understand why shipping Ogg Vorbis and Theora in Firefox is important. The answer is simple. Our goal is to enable unencumbered, royalty-free, open-source friendly audio and video playback on the Web. Shipping Vorbis and Theora will achieve that for over 100M Firefox users --- not everyone yet, but a good start! To reach the rest, we will keep turning people into Firefox users, and pressure Apple, Microsoft and other vendors to support Vorbis and Theora. Vendor pressure must come from content providers dedicated to making compelling content available in free formats (coupled with a superior playback experience in Firefox). Wikimedia has stepped up and hopefully others will follow.
In fact, we'd love to be able to ship open-source codecs for H.264 and VC-1, but that can't happen until the MPEG LA's patents expire, or MPEG LA decides to give up its patent licensing fees, or software patents are struck down by the US Supreme Court (and possibly other jurisdictions). It would be unwise to wait.
Let me provide a mini-FAQ covering some of the other questions that have been asked:
Isn't Theora inferior to H.264, so no-one will use it? Theora isn't bad on an absolute scale --- look at some demos to see for yourself. There is ongoing work to improve the encoder so it's even better. Even if it's slightly lower quality than H.264 at some bit rates, it's still going to be very useful to people who favour free formats on principle, or who need an open-source solution, or who want a solution that Just Works across platforms without plugins, or who just want a solution without licensing fees --- for example, if you just want a convenient way to use a video clip in a Web app. Look at modern bank ATM interfaces, for example, to get an idea of what people could be doing in Web apps.
Since people can already play Vorbis and Theora in the browser by downloading a plugin, why is having them in Firefox important? Because the value to content providers and the pressure on other vendors depend entirely on these codecs being available to a lot of users --- and most users don't download codec plugins.
This is a great example of why Mozilla and Firefox are important. The Web needs a high-market-share browser vendor committed to free software and open standards across the board.
Will you get your pants sued off? We've taken legal advice. I don't know if we will talk about the results, but our actions speak loudly enough. Cutting Ogg support remains as a last-resort option.