As Mark Brownlow explains in his state-of-play update on video in retail email, early use of video in email was really linking an image of a video to a video hosted on the Web.
Some retailers like Overstock, REI and Sears got clever and converted video to animated gifs. (Hat tip to Chad White of the RetailEmailBlog for these examples). REI uses Liveclicker, but Anna Yeaman has a DIY tutorial on how to convert video to animated gif.
What's so tough about embedding actual video in email?
How to beat the filters
Last month, email certification company Goodmail launched its video certification project, CertifiedEmail. CertifiedEmail includes a trust stamp which is like a VIP pass through spam filters. Goodmail customers pay a fee to send email with CertifiedEmail, and embedded video will play at Goodmail's partner ISPs which for now includes AOL, with more ISPs to follow.
The CertifiedEmail service locks down the bit of code that calls the video server, allowing actual video code to live in the email rather than just a placeholder. Target is one of the first companies to sign on with the service.
Google recently announced it would support Youtube links in email for Gmail accounts. It's not an embed, rather Gmail recognizes Youtube code and displays the video in the email -- provided that the Gmail user has enabled the feature through Google Labs. It's unlikely the average Gmail user is going to turn this on -- so don't get too excited. But it's possible this will become default in the future.
For now, the animated gif trick seems the most reliable method. CertifiedEmail is promising but needs a few more ISPs on board.
Stay on top of retail email trends
3 great retail email blogs are RetailEmailBlog, StyleCampaign and Email-Marketing-Reports. 2 hot retail video blogs are VCC and Videoretail. I follow these folks to stay in the loop. And do read the entirety of Mark Brownlow's post Video Email: Current Practices.