The new Microsoft Silverlight 2.0 includes support for the H.264/AVC video coding standard.
Following this link you can find a Q&A with Scott Guthrie, corporate vice president of the Developer Division at Microsoft, talking about the new Silverlight. Here is an interesting excerpt:
Question: Historically, people have associated Microsoft with VC-1. Does this signal a change in direction?
Guthrie: No. Although we have been working with VC-1 for some time, it’s not widely recognized that Microsoft has also been an active participant in the standardization of H.264/MPEG AVC for many years, and we’ve included H.264 support in several Microsoft products. Microsoft’s Gary Sullivan was the chairman of the Joint Video Team (JVT), which developed the H.264 standard, and he recently accepted an Emmy Award on behalf of the JVT.
Question: Does this mean that Silverlight is moving away from Windows Media?
Guthrie: Not at all. This is about offering our customers more choice. Media producers and distributors around the world have enjoyed the high quality, flexibility and affordability of Windows Media formats for over a decade. As a testament to its pervasiveness, Windows Media can be found in almost every conceivable media scenario from desktop home video to feature films and TV broadcasts.