Yes but future versions of Flash will support WebM. YouTube is moving to WebM and Firefox, Opera and Chrome don't support H.264 video. Google is the leader of Internet video and I am sure many other sites will follow YouTube's lead once they convert to WebM.
Arguably, Google is not the leader of quality internet video, so it will remain to be seen what the major platforms: MS, Apple, do about it. For users, I'm sure many won't care either way.