A number of PC webcams owners have experienced issues with using them following the release of the Windows 10 Anniversary Update. Microsoft is working on a fix that will be released in September.
According to a support thread on the Windows Dev Center (via Thurrott.com), many users state they have experienced issues with Skype video calls freezing up after the Anniversary Update is installed. This has apparently affected many enterprise customers who rely on webcams for various jobs,
Mike M, who works on the Camera team at Microsoft, stated that the reason for these problems was that support for MJPEG and H264 encoding for USB webcams no longer works with the update, due to changes in how apps access the camera. Microsoft chose to support YUY2 encoding instead:
With the Anniversary Update to Windows 10, it is now possible for multiple applications to access the camera in ways that weren't possible before. It was important for us to enable concurrent camera access, so Windows Hello, Microsoft Hololens and other products and features could reliably assume that the camera would be available at any given time, regardless of what other applications may be accessing it.
It was decided that MJPEG and H264 encoding would cause performance and interference issues with the new camera features in the Anniversary Update:
So yes, MJPEG and H.264 being decoded / filtered out is the result of a set of features we needed to implement, and this behavior was planned, designed, tested, and flighted out to our partners and Windows Insiders around the end of January of this year. We worked with partners to make sure their applications continued to function throughout this change, but we have done a poor job communicating this change out to you guys. We dropped the ball on that front, so I'd like to offer my apologies to you all.
In a follow-up post, the Camera team announced that it is working on a fix for both the MJPEG and H264 encoding problems The MJPEG patch could be out sometime in September, while the H264 encoding update will follow sometime afterwards.