It seemed to me like they meant the question politically, not technically, as in, would AOMedia have been possible?
I think it's widely understood that the technical innovations in sixth-generation codecs like AV1 were simply not computationally feasible on circa ~1993 devices, so I highly doubt that's what was meant. Therefore I'm not sure how transistor density relates to funding models for DSP innovation.
The answers aren't entirely separable. Hardware capable of any kind of video wasn't accessible to the larger community and it sure as hell wasn't affordable.
When Xiph.Org started (1994), even audio required high-end hardware. Yes, sound cards were available for PCs, but big enough hard disks were not.
When only the elites have access, the standards are made by elites.
I think it's widely understood that the technical innovations in sixth-generation codecs like AV1 were simply not computationally feasible on circa ~1993 devices, so I highly doubt that's what was meant. Therefore I'm not sure how transistor density relates to funding models for DSP innovation.