We've been working on a community web site project that allows users to upload videos and have discussions about the video content. We explored various video hosting options for this project, and identified a few that work well with Drupal. While most video solutions can work with Drupal, these ones have existing modules or plugins for integration, thereby reducing development time significantly:
1) Kaltura: Kaltura is an open source video-hosting and management platform. They have an integrated player and file management system that integrate with Drupal via the Kaltura video module. This module makes it simple to theme the player's pages and associated areas. Also, Kaltura hosts the first 10GB of content for free. The entry level service cost of Kaltura is about $200-$300/month. We used Kaltura for a mid-sized non-profit site and were pleased with the service quality.
2) BrightCove: We used BrightCove for a major music company portal site. The service quality is also great, with excellent support. The BrightCove player can be easily skinned to fit the branding of the site. There are a lot of features for custom development, including pulling playlist feeds via RSS. However, the entry level cost of BrightCove is higher, at about $1,000/month.
3) Amazon S3: We are using S3 to host our latest sustainability-focused video site. S3 offers a lot of flexibility and has a great pay-as-you-go structure. We previously posted a blog post on setting up S3 with the Flash Video Module and FFMPEG. You have full control over the whole storage process if you use this option, and you can also use different video players. And the service is cheap as borscht, coming in at less that $100/month.