I doubt it costs Cisco anything extra because they probably need the distribution rights for other products they develop (for example WebEx.) Besides it a good PR benefit for them with minimal incremental cost.
It costs Cisco lots (I work at cisco) as we were not close to paying the 6.5 million cap before this. Mozilla has been contributing to the code and making sure the project runs well but not towards any MPEG-LA payments. There are probably a bunch of reasons Cisco did this but making interoperable video just work on the internet would be at the top of the list. That's good for Cisco and others.
That sounds like loose change, but probably stuck up in bureaucratic decision-making at anyone who thought of this before. ("Why are we spending $6 million a year to make it free for everyone else again?")
EDIT/UPDATE: In the second paragraph, I was referring to other companies and why they didn't do this earlier. It clearly brings Cisco quite a bit of goodwill to do this, and to see more video flowing on the web.