Google to acquire On2 technologies for $106 Million

Google and On2 technologies have jointly announced that they have entered into a definitive agreement under which Google will acquire On2.

On2 is well known for compressing high quality video ready for streaming on IP networks. On2's compression technologies power the video in many of today's leading desktop and mobile applications. On2 customers include Adobe, Skype, Nokia, Infineon, Sun Microsystems, Mediatek, Sony, Brightcove, and Move Networks.

"Today video is an essential part of the web experience, and we believe high-quality video compression technology should be a part of the web platform," said Sundar Pichai, Vice President, Product Management, Google. "We are committed to innovation in video quality on the web, and we believe that On2's team and technology will help us further that goal."

"We're thrilled that On2 is joining one of the world's most innovative companies," said Matt Frost, interim CEO of On2. "After intensive review of On2 products, Google confirmed our long-held beliefs as to the quality of our video technologies. This transaction is a testament to the hard work of every On2 employee and the strongest possible endorsement of our products and people. On2 will continue to improve, support and sell our products throughout the transition. We believe that Google shares our ambitions and know that our products and expertise, combined with Google's globally recognized brand, ingenuity and resources, will create an incredible team."

The deal is still subject to approval by On2 Technologies' stockholders and review by relevant regulatory authorities, including the SEC, but Google expect it to close in Q4. Google refused to comment further on how it plans to implement On2's technologies and simply stated "we are committed to innovation in video quality on the web, and we believe that On2 Technologies' team and technology will help us further that goal."

It's clear that this deal will pave the way for greater compression techniques for YouTube and could mean we'll all be able to watch the latest viral videos quicker and in higher definition.

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*Gasp* Google is buying a company!?! I guess that means Google must be not innovative enough to do their own R&D, and they get much of their 'research' through acquisitions. You know, like another big tech company we all know.

Maybe I'm off base here, as no one else has brought it up... but it seems to me this acquisition will boost multimedia speed and quality capabilities for Chrome (and next year, Chrome OS). Just a thought...

It's clear that this deal will pave the way for greater compression techniques for YouTube and could mean we'll all be able to watch the latest viral videos quicker and in higher definition.

Not Really...
AFAIK On2's claims to fame amount to an FLV encoder, & an almost deal with folks in China that were trying to come out with an alternative to HD & BD back when they were new. Wellllll, the FLV (Flash Video) encoder *might* have brought in some revenue, but free alternatives were soon released, so On2 really needs a parent with deep pockets. Google for their part probably saves some licensing fees, & may gain some efficiency improving YouTube's upload auto-conversion / encoding.

Ground breaking increase in quality? Don't count on it any time soon since Adobe owns Flash (which YouTube uses), & sets the std. 'Course YouTube could always switch formats, but the reason for using Flash Video is most everyone has the player -- not because it's higher quality. And, Flash video is On2's (only?) current specialty.

mikiem said,
Not Really...
AFAIK On2's claims to fame amount to an FLV encoder, & an almost deal with folks in China that were trying to come out with an alternative to HD & BD back when they were new. Wellllll, the FLV (Flash Video) encoder *might* have brought in some revenue, but free alternatives were soon released, so On2 really needs a parent with deep pockets. Google for their part probably saves some licensing fees, & may gain some efficiency improving YouTube's upload auto-conversion / encoding.

Ground breaking increase in quality? Don't count on it any time soon since Adobe owns Flash (which YouTube uses), & sets the std. 'Course YouTube could always switch formats, but the reason for using Flash Video is most everyone has the player -- not because it's higher quality. And, Flash video is On2's (only?) current specialty.

1) Open source VP8 which is said to be at least comparable, and arguably better than H.264
2) If VP8 is royalty free and open source Mozilla and Opera will support, Google will obviously support it and Safari may begrudgingly support it. The W3C will also accept it.
3) Serve YouTube as VP8 streams in the tag to compliant browsers, fall back to flash for IE.

I'm pretty sure that's there plan. They're buying ON2 because they wan't to buy an advanced codec, not because they're interested in ON2's current $16k/yr business.

Very cool, but they might have some trouble competing against Microsoft's new instant on, HD streaming. We'll see how their compressed look.

Well if you are referring to silverlight demo of adaptive streaming, that's nice on a youtube like video of a cat falling into a trashcan but if I am going to watch a HD movie streaming, I rather wait 5 min at beginning to have full quality than have the quality just drop in the middle of the movie.

Don't expect this to become open source any time soon. VP6/7/8 are all quite healthy licensing cash cows (not including 6 so much any more).

This seems an odd thing for Google to do. On2 codecs are pretty light (though not much between 7 and H.264) but this must be why I am not a multi-millionaire. I can't see the reasoning of supporting On2 unless they are going to strip the technology and push it into OGV or something similar.

If they open source VP codecs, there is a good chance they will push H.264 off the web as the primary format, but MP codecs will survive outside of the internet. Very, very odd. /blather

Septimus said,
Don't expect this to become open source any time soon. VP6/7/8 are all quite healthy licensing cash cows (not including 6 so much any more).


lol cash cows.

Look at On2 financials. They make pennies compared to what google makes.

They charge 5-6x less then MPEG LA. Nothing to stop them adjusting to be inline.

Google make more than most, but why would they take on something that shouldn't improve that bottom line?

It can't be the tech. I've met the On2 founder, seen what they have been working on, it's good, but it's not even as good as MS tech. As you say, not cash cow as such, still steady revenue. H.264 is equal to VP7 in efficiency, Silverlight (WMV,VC1) destroy anything they are working on but it's MS. OGG is **** but free.

Of course they will have shown google something to make this deal happen, but **** knows what it is.... the only obvious choice is google will open source everything, take the hit and just add more confusion to web standards, which just goes to prove they are MS from 1998.

How will they add more confusion? If they open source VP8 it will end the confusion. It will basically satisfy both sides of the argument (licensing vs. compression). If Google open sources this, theora will basically become obsolete, and H.264 will be unnecessary and it's high fees can be avoided. They'll essentially kill two birds with one stone and transform a situation which requires large compromises into a win-win.

Also it doesn't need to be as good as anything. As long as it's in the same league and open everyone will be happy.

It's clear that this deal will pave the way for greater compression techniques for YouTube and could mean we'll all be able to watch the latest viral videos quicker and in higher definition.

Perhaps, but not because of this deal. Flash Video is set to move to H.264, which has nothing to do with On2 Technologies.

Never hear of On2... but from website it seems they target almost exclusively Flash. Am I reading that right ?

I was thinking Google would go for something which allow them not to be hostage of Adobe willingness to develop their player/plugin...

Ikshaar said,
I was thinking Google would go for something which allow them not to be hostage of Adobe willingness to develop their player/plugin...

Flash isn't much more than just a wrapper for the video. I don't think they need more features than that. For everything else there's AJAX, and soon WebGL (hardware 3D acceleration for HTML 5).

Holy crap if that happened then apple would be f*cked it also means we iPhone users might get some decent service and google voice at the network end!! We can dream!