What's your definition of "best", and in what order would you rank it's importance? The volatility of this topic is right up there with money, sex, politics, and water rights. Some of your priorities might include:
1) Best Video Quality
2) Media Player Market Share by Format
3) Digital Rights Management
4) Cost of Server Software, if Streaming
In the interest of brevity, we will limit this discussion to the Big Three video formats, plus Flash, because that is what the vast majority of internet users have on their computers. There are of course many other internet video formats and players, but as a content creator, your top priority should be to put rich media on the web that people can watch without having to download a player. Study after study since the dawn of time has proven that casual internet surfers are a very impatient bunch of people who would rather bail out of your website than sit through a media player download and installation. So just how compelling is the content that you are offering?
If you are new to the concept of streaming video, it would be advisable to do a search on Google.com for the differences between true streaming video, HTTP-streamed video, and downloadable video. The latter is by far the best choice for top quality, but true streaming video is necessary for websites like CNN.com, because the people that go there want to see the content immediately, without waiting for it, and without any hiccups during playback. All website hosts can serve up HTTP-streamed video, and it costs a lot less because it doesn't require specialized web server software, but there are streaming performance issues with the way it is handled over the internet.
Windows Media
Because it came from Microsoft, Windows Media is the 800-pound gorilla of the internet video world. The two overwhelming things that it has going for it are player penetration and excellent video quality. You can judge the quality for yourself by downloading the test clips on this website, but understanding the market share numbers is quite a bit more difficult.
When defining player penetration on the internet, the starting point always has to be with the number of default media players installed with the operating system of the computer. The Quicktime Player is installed natively on Apple computers, and the Windows Media Player is installed natively on PC's. Flash has been bundled with Windows XP. The RealOne media player generally has to be downloaded and installed before you can watch it on your PC or Mac. Now turn all that data into media player market share. How many desktop computers are accessing the internet? Roughly 822-888 million, world-wide:
-http://www.c-i-a.com/pr0305.htm
-http://www.internetworldstats.com/stats.htm
So how many of those desktop computers are Mac's, and how many are PC's?
There are multiple sources of statistics proving that the percentage of Apple Macintosh computers on the internet is 4% or less:
-http://www.w3schools.com/browsers/browsers_stats.asp
-http://www.google.com/press/zeitgeist/zeitgeist-jun04.html
-http://www.thecounter.com/stats/2005/May/os.php
So the total number of native Quicktime installed players on the internet is 4% or less, not much of an advantage over Flash or RealOne.
By comparison, "Windows Media Player is a feature of the operating system and cannot be removed entirely.":
-http://www.microsoft.com/windows/windowsmedia/mp10/faq.aspx#2_4
Statistics show that the "Current trend is that Windows XP is growing fast. The Windows family counts for about 90%" of all operating systems on the internet:
-http://www.w3schools.com/browsers/browsers_stats.asp
Which is statistically another way of saying that the overwhelming majority of all internet computers are capable of natively playing the Windows Media format. So just how compelling is your Quicktime content? Will they sit through a player download in order to see it?
Quicktime
Back in about 1996, the only video formats on the web were MPEG-1 and Quicktime, which used the CD-ROM-based Cinepak video codec. Apple owned the internet at that point; not only did they have the majority of media player market share, most of the websites on the internet were designed on Macintosh computers. Fast forward to 2005, and you'll see that Apple has thrown away their media player market share by failing to keep up with the quality of their video and audio internet codecs. In an age when many people would like to use H.264/MPEG-4 AVC, Apple was seriously dragging it's feet with releasing Quicktime 7 for the PC. Instead, they released Quicktime 7 for the Mac first, which only 4% of the computers on the internet were capable of utilizing. Will this company ever understand the concept of market share?
There is a lot to like about the stability of Quicktime, but as a rich media content creator in 2005, you have to be asking yourself about Digital Rights Management. Apple has been selling Itunes via it's website, using it's Fairplay DRM, which was allegedly cracked several months ago. Check out the Linux-based "PyMusique" on Google.com for more info. At this point in time, Windows Media is clearly the most widely accepted Digital Rights Management solution in use today. The adult industry, in particular, has used Windows Media Digital Rights Management extensively for selling streaming video over the internet.
Flash
UPDATE 10/2007: Thanks to the overwhelming popularity of video sites like youtube.com, the rollout of the latest Flash player version has taken off like no other third-party media player in history. There are minor quality issues with scaling the frame size of the Flash video, but it's a great media format to use for your videos if you can find a Flash server to host your files on.
The Flash Rich Media format started life strictly as an animation format. In 2002, the Sorenson Media video player was integrated into Flash, because there was no Flash video codec. In line with it's Sorenson roots, Flash video now looks like Quicktime video, not including the new H.264/AVC codec, of course. So why would you want to use Flash over Quicktime? Because Microsoft started bundling the Flash player with the first release of Windows XP. If you check the aforementioned statistics, you'll see that WinXP is running on approximately 70% of the desktop computers on the internet, which guarantees far better Flash player penetration than you'll get with Quicktime. Macromedia Flash is also the only third-party software packaged with WinXP Service Pack 2, but the drawback there is that it's version 6 of the Flash player, not version 7. However, there are also some concerns about the compatibility of internet video players within Microsoft operating systems, because under WinXP SP2, the default setting for ActiveX controls is now off. You can read more about all of the above at:
-http://www.zdnetasia.com/news/software/0,39044164,39192550,00.htm