AFAIK they don't. There is a cap on licensing for H264. Cisco is already hitting that limit with their commercial offerings, so they can essentially offer OpenH264 at zero (licensing) cost.
Supposedly offering OpenH264 ended up costing Cisco more money in licensing fees. See Monty Montgomery's blog post from 2013 about the initial announcement of OpenH264:
There are a couple of comments in the comments section titled "Cisco's Costs" in which Monty says that someone he knew at Cisco told him that they had been under the licensing cap and that the OpenH264 project would increase their licensing costs.
Cisco is also a h264 patent holder, which may have given them a better licensing deal.
Beyond this, Cisco is part of the 'Alliance for Open Media', consisting of Google, Cisco, Intel, Netflix, Amazon, Microsoft, Mozilla (the latter funding Daala) who are building a new royalty free codec for their needs based upon vp10, but which will make use of any useful technology their members have access to.
You are right, it's not a good idea for anything other than video conferencing because of being Baseline only. I don't think that makes it "terrible" - WebRTC is only video conferencing.
That's a pointlessly inflammatory statement, particularly in the absence of any explanation of what you're referring to. Are you referring to code quality, the fact that it currently only supports the baseline profile, etc?
The tuning is and will always be far worse than x264, because no commercial team will ever have the motivation to beat the years of video encoding maniacs' free time spent on it.
Plus the Cisco employees probably aren't any good at Touhou games. Presumably they're pretty good at tuning video calls though.
x264 was and is a very good encoder for H.264, but it sounds a bit extreme to say that no one can ever beat it - real time streaming was never its primary use case. I think the real lack of motivation to improve it is because most of the interest is now in newer video formats, like VP9. Also, many of the developers of x264 were paid by the commercial licensing program, so I wouldn't say it didn't have any financial motivation.
Also, I'm proof that x264, in fact, does not have a monopoly on Touhou-playing video codec developers :)
The commercial licensing for x264 came about well after it was largely "finished" (there's still ongoing work being done, but no major improvements since 10-bit support in 2010). The idea of maybe selling it one day never really came up when all of the work that makes x264 interesting was being done.
Yeah, my comment now looks a bit weird after yaur silently edit the original post to add everything after the first sentence.
I still think “terrible” is a bad choice of wording – “slow” would be an objective statement of fact and the fact that it's within a factor of 2-3 of x264 is worth knowing but hardly enough to say nobody could use it.
Cisco has a lot of hardware VoIP clients that use H.264 and they want to make sure that browsers can talk to them.
Google already ships an H.264 software decoder in Chrome, so I'm surprised they would (also) ship OpenH264. Maybe they don't want to pay extra for H.264 encoding licenses or to increase compatibility with other WebRTC clients using OpenH264?
Cisco sell a number of products that use H264 and so were already paying some fees (although not necessarily the max license level) for the use of this codec.
