Comment It's not about media formats (Score 2, Informative) 411
Microsoft hasn't been able to leverage any of its encoding formats through their browser. MP3 and AAC have completely outstripped WMA and I'm not aware of any major player utilizing WMV on the video side.
Media formats are pretty orthgonal to the browser; most playback is via plugins, and there are WMV playback plugins available for all major browsers. Microsoft has a NSAPI implementation for Firefox, Distributes Flp4Mac for free. And of course Silverlight supports WMV (along with MP4 and MP3), and is supported in the codec pack for Moonlight.
WMV is quite widely used for premium content where the studios require DRM, as Windows Media DRM and PlayReady is the only widely deployed DRM available for license (Apple's FairPlay is only available to Apple as a publisher and Apple as a device vendor). So WMV is used for Netflix, Blockbuster, and other services in the USA, and it's used even more widely in Europe and Asia's video services.
But again, nothing to do with the browser.
With Silverlight supporting H.264 and AAC now, the actual codecs and media formats aren't the interesting point of competition. The big differences between Silverlight and Flash today are much more systems layer stuff like adaptive streaming and rich presentation layers. HTML5 is interesting, but even the proposals are well behind what Flash and Silverlight have already deployed for complex players.