YouTube's Steve Chen told Liz Gannes and Om Malik in November that YouTube is not focused on enabling HD as much as they are on universal access. His statements were a bit unclear though. A substantial group of outspoken video producers seem determined to demand HD for their work, but Chen contends that short form online video isn't a suitable setting for HD.
That said, Chain also confirmed that the company is looking at bandwidth detection and other steps that could enable some viewers to watch HD. That's what DailyMotion and Vimeo have done. Likewise, Chen's contention that he wants to watch HD on his couch not online doesn't seem to jive so well with a the direction that some people see the market going in - towards watching online video on the couch. Perhaps Chen doesn't see things going that way. There certainly isn't much imperative for YouTube to be ahead of the curve these days, feature wise, but are they missing out on an important opportunity in being slow to adopt HD?
Given the percentage of views on the site that come from professionally produced content like music videos, I can only imagine it's a matter of time until YouTube goes HD.
Vimeo isn't a competitor numbers wise around the world, but they do host some very high quality content. DailyMotion is a significant competitor for viewer numbers, outside the US at least. The company has raised more than $40 million in venture backing. Below is a sample of DailyMotion's HD content, already in a larger player than the embed code offers by default. Video consumption is a pliable thing, to some degree that's true even for the lowest common denominator of YouTube viewers. I think YouTube should offer HD.