YouTube has the selection lead, and that has led it to a huge lead in the online video clip library space. It did the smart thing and went with a video format that almost anyone on any platform can play, and that is Flash video (.flv files).
But here's the thing: Flash video looks like crap. It is the Ford Escort of video formats. On many YouTube videos I feel like I'm trying to watch a 12-inch black-and-white television through the wrong end of binoculars. If you were to start a competitor to YouTube, and it would be silly to do so at this point, one thing you could do to win my allegiance is to use Quicktime as your default codec. Doesn't have to be HD. It doesn't even have to be another company; YouTube could offer Quicktime as the Lexus to its own Toyota.
If I want to watch a blank white screen with no sound (oh, how modern), I want to see it in quality.