I've confirmed that Monday Google will launch an in-browser video playback feature based on the open source VLC media player. This is the logical next step for Google's video search and upload function, which began taking uploads from anyone who cared to submit back in April.
I'll try and embed an example in the blog once its launched. With Google providing the hosting and streaming - plus, possibly a payment mechanism - this could really throw the doors open to smaller content providers. Google as a TVOD channel?