Initial support will be restricted to streaming through the browser when used with MP4 or AAC audio. Microsoft is considering adding additional audio codecs—Opus is often used with VP9, and Microsoft is also considering Ogg and Vorbis support—and extending support to support local playback. Microsoft intends to support both software decoding and, where possible, hardware decoding.
Longer term, Microsoft, Google, and a number of other big tech companies are working to build their own royalty-free codecs for use on the Internet in an effort called the Alliance for Open Media. Historic efforts by both Microsoft and Google to develop royalty-free codecs have met with opposition and patent claims from organizations that have performed video codec research and development. It's not yet clear how the Alliance will avoid these same patent traps.