Today, you need to use plugins and proprietary formats to view videos in browsers. There is great demand for a better solution to serve video content to users. A native video format in browsers without all the licensing and patent issues that plague other format could be beneficial to all parties (perhaps except those who make a living licensing expensive proprietary technologies for such purposes).
Opera's proposal is to use Ogg Theora, and howcome has already been discussing this for a while with Mozilla. While there are certainly obstacles in the way (getting it all off the ground with proper cross-browser support and decent content), it might be possible if all or most major browsers support the format. Even browsers that may not support it could make use of plugins until they catch up.
One thing to keep in mind that adding native support for Theora in Opera would only add about 300K to Opera's overall size! And I am sure that could even be optimized to reduce it even further.