It won’t be Vimeo who will threaten the position of YouTube as biggest video site but the Facebook. Vimeo put too much effort to quality on the other hand Facebook has eye-hurting quality of videos but Facebook has people on their side, a lot of them.
The services that Facebook provides are poor but we are talking here about internet giant with huge number of programmers so any drawbacks can be solved quickly. And what more in the past Facebook didn’t support videos as much as it support now. Facebook video is hot stuff now and video sharing grows immensely.