How much better do you think a new codec needs to be to make it all the way to mainstream? 2x? 10x?
The choice a chip maker has is to include popular legacy/free codecs like mp3, or pay some IP holder that won't even pick up a phone unless there is over $3m on the table. h264 was easy by comparison, but hardly ideal. NVIDIA was a miracle when you consider what they likely had to endure. =)