Better video quality with less bandwidth and no third-party code
Some of us may have noticed an increase in Google+ Hangouts quality in recent weeks, but the bump to 720p HD video is more than a simple settings change — it's the move to a brand new video codec called VP8. Prior to this transition, Google was using the more widely-known H.264 to handle video in Hangouts but has run into issues handling multiple video streams at high quality with the codec.
VP8 is a royalty-free and open codec that brings several improvements for the end user, including higher video quality — which is rolling out to everyone now — and group video calling in the browser without any additional plugins. The overall reduced bandwidth required for VP8 video also means that Google can now serve up higher quality streams with even less data.
The other part of this move to higher-quality and lower-bandwidth video is WebRTC, which is a new video standard that Google has been a big proponent of and has integrated in both desktop and Android versions of Chrome. Google has planned to move completely to WebRTC for Hangouts but a few issues have prevented it from happening. Those issues are being solved and we could see it in the coming months.
The end result for us as users of Hangouts is better quality with no third-party code or plugins required to do video chats in the browser, and that's a big deal. We're clearly still in a transitional period, but you shouldn't see any hiccups along the way — Google says the transition from H.264 to VP8 will be completely seamless from the front-end.