Lots of good bits came from FOSS codecs but Daala and friends have never competed with the commercial stuff that have 100s of decades of paid engineering time in development.
Also it’s pretty impossible to do anything in the codec space without tripping over a patent.
That said the very best implementation of the patented and un-free H.264 codec was built as open source (x264) but you still technically need to license all the h.264 patents to use x264 legally in many scenarios or jurisdictions.
So to be more accurate the problem is not open source being unable to compete with commercial stuff on technical merits.
If you read some of Xiph's development blogs (with work on new audio or video coders such as aforementioned AV1), a lot of the process is carefully going around the "inventions" that the bug bucks have declared as their property at the patent office.
No, I mean zero of the pure-FOSS video codecs have ever been anywhere near stare-of-the-art in their time. So FOSS codecs have for three decades been unable to compete on technical merit.
Even the current state-of-the-art audio codec Opus gets a lot of its efficiency from proprietary algorithms from Skype that were Open-sourced and parents made royalty-free.
Video codecs are bleeding-edge comp-sci and expensive to develop (lots of highly paid engineers, test labs, and test subjects (people) required).
Well, I recall the previous "poster child" of FOSS codecs was Ogg Vorbis which competed with MP3 and AAC just fine.
As for video research being expensive, you're right, of course. We're probably seeing much increased funding in FOSS codecs now compared to all previous decades.
Vorbis became competitive with MP3 and AAC many years after those commercial codecs were introduced. So again, the FOSS codec was nowhere near state-of-the-art.
