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Updated: Google likes to buy things — sometimes with grand designs. But as we all know, grand designs have a habit of turning into delusions of grandeur. Today, the search giant made two moves. First, it made a smart and strategic bet by agreeing to buy […]

on2_video_vp6-transUpdated: Google likes to buy things — sometimes with grand designs. But as we all know, grand designs have a habit of turning into delusions of grandeur. Today, the search giant made two moves. First, it made a smart and strategic bet by agreeing to buy video compression technology company On2 Technologies for $106.5 million in stock. It’s a gamble worth taking. Though whether it will pay off remains to be seen, for On2 Technologies’ codecs are losing favor to H.264.

Regardless, it’s in line with Google’s core competencies, that of web infrastructure technologies. “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, VP of product management at Google. With On2, Google can actually make enhanced video experiences a core part of its Android and Chrome system platforms. And by pushing On2′s codecs it can try to shape the future of web video.

I would pay special attention to what Google does with On2 on Android, because there is an opportunity for it to outshine rivals such as RIM and Apple. Just look at On2′s mobile video arsenal: It owns technologies for embedded video for mobile platforms (Hantro) and On2 TrueMobile System, a mobile video system designed to send video across the networks — including 2.5G, Edge, 3G and 4G networks — using On2′s VP7 technology.

It also makes a lot of sense because most of its rivals have their own video technologies: Adobe with its market-leading Flash, Microsoft with its up-and-coming Silverlight and Apple with Quicktime. And On2 is behind many video codecs that it licenses to such aforementioned Google competitors as well.

Liz Gannes over on NewTeeVee explains:

Just about everyone who powers online video or has their own Flash player, including Adobe, continues to pay On2 licensing fees for its VP6 video codec. However in the last couple years the industry has largely chosen H.264 as VP6’s successor….. YouTube itself is thought to use an open-source version of VP6. We wouldn’t be surprised if Google goes ahead and open-sources On2 itself.

Now let’s turn our attention to those delusions of grandeur. Back in January 2006., Google spent $102 million buying dMarc Broadcasting in the hope of becoming masters of the radio universe. “Google is committed to exploring new ways to extend targeted, measurable advertising to other forms of media,” said Tim Armstrong, then-VP of advertising sales. Armstrong is gone, and so is the radio advertising business. Today San Francisco-based WideOrbit announced that it’s buying Google Radio Automation Business, aka dMarc, for an undisclosed amount. But there’s no mention on Google’s web site about the sale. Instead it’s all about celebrating the acquisition of its newest, shiniest toy: On2 Technologies.

  1. Apparently Skype uses On2 technologies for Video .. eBay wouldnt like to pay Google.

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  2. Om,
    This is not the same as Adobe or Silverlight.
    On2 does the compression of videos.

    From their website

    “On2 offers industry-leading solutions for video compression used in Adobe� Flash� Player, Web2.0, VoIP, mobile video and embedded devices. It is no coincidence that the leading names in video use On2�s products. If you are serious about video, sooner or later, you will use On2.

    On2 has more than 2 billion units installed for our On2 Video VPx codecs and optimized implementations in software and hardware of leading standards based codecs such as H.264, H,263, VC-1, and MPEG-4. Among our customers are: Adobe (Flash 8 video), AOL, Skype, Nokia, XM Satellite Radio, Sony, Yamaha, TI, LSI Logic, Analog Devices, VideoEgg, Brightcove, Cox, Naver.com (Korea), Daum (Korea), Tencent(China), to list only a few. ”

    Their forte is

    Save Bandwidth Costs.
    Encode Faster. Playback Easier. Reach the Largest Possible Audience.

    and finally

    Availability and Cross Platform Compatibility.
    On2 video compression formats are available as codec SDKs. On2 also provides RTL and embedded software designs for leading processor cores including ARM, MIPS, TI and Intel.

    Check (ARM, TI and Intel).

    and finally

    Software Development Kits

    * Flix Publisher and Flix Publisher Live – Browser based encoding solutions that allow your users to encode Flash FLV video on your website via a transparent browser plug in, making use of their own processor resources, and uploaded to your site using simple drag and drop operation.
    * Flix DirectShow SDK – Create Windows desktop or server based VP6 video encoding applications utilizing Microsoft’s DirectShow interface.
    * Flix DirectShow Live SDK – Create Windows desktop or server based live VP6 video encoding applications utilizing Microsoft’s DirectShow interface.

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    1. gbp & boredsysadmin.

      I agree and know it is not the same thing and yes, i am aware they are frameworks :-)
      What it is doing is going one step deeper into the video food chain and controlling the codecs and soon possibly making it possible to watch videos through the browser without needing either flash or silverlight. I think they can make a big disruptive move here. and that was my point.

      BoredSysAdmin, hopefully it answers your question.

      Sorry if i wasn’t clear

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      1. I think what we’re seeing here is the market on its way, working its magic. For long, codec vendors have gone the “we make codecs and we want you to pay us every time you use it” kind of licensing terms that plague even the likes of H.264 today. Companies such as google, if they can buy off all the rights to all parts of a codec, can very well put a price on what the world thinks a codec is worth rather than the codec developers. Ogg Vorbis and Theora came into existence also for the very same purpose.

        The codec licensing models of the past are obsolete and we’re going to see those sticking to them come crumbling down. They are comparable to selling a hammer with a price on every nail you use it to hammer. Examine google’s move in the light of HTML5′s tag – which codec should the video use?

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  3. I bet google wants to reduce the bandwidth by using compression.

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  4. Looks like this acquistion is to get rid of On2 codecs from the web which is good thing. Google is already embracing open standards H.264. It is slowly changing the video encoded in youtube to H264. RIP VP6, VP7, VP8 ….anyway they were not better than H264

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    1. Mishan Aburted Wednesday, August 5, 2009

      Is it the On2 codec or H.264 that makes Flash video playback so ridiculously CPU-intensive? It’s amazing how standard def Flash video taxes the CPU on my laptop (90% CPU utilization), while DivX or WMV or DVD barely causes it to break a sweat (20% utilization). Someone needs to optimize their codec, fer chrissake.

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      1. It’s the implementation of the flash player, it’s actually Adobe’s fault. It seems Adobe’s finally getting around to solving it, by using HW accelerated video (like any decent video player did for the past 10 years…)

        also read up on H.264 vs VP7

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  5. Om, on2 video compression technology got actually nothing to do with flash/silverlight which are both web frameworks for interactive content. On2 developed video compression codec which is specifically scales good for web sites.
    Quicktime is video framework which includes both proprietary video/audio containers and codecs.

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    1. I answered your question above. Sorry if i wasn’t explicit in my explanation.

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  6. Google will open-source and licence free VP6, VP7 and Vp8 which will thus become the new upgraded Ogg Theora (which is based on the old less effecient VP3).

    Combining it with HTML5, Google can turn the switch on Youtube, forcing all users of Youtube to upgrade to HTML5 compliant browsers that support the free and open source video codec behind the video tag instead of Flash.

    H264 is proprietary and costs a lot of money to licence. Google will make new open and free video codecs and give them to the world for free.

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    1. That would be video heaven…. HQ video without any patent/license costs… This might have some chance of replacing the current de-facto standards.

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  7. Google is a genius!

    Google will instantly convert millions of YouTube viewers to use Theora without anyone noticing.

    I love Theora! It should be the next .avi and .mpg, it’s simply BETTER than H264.

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    1. It’s better than others, when you think about freedom (as in GNU), but when you consider the video quality it only comes close to H.264 (when using newest theora encoder), and thats only in SD video. Further drastic enhancements to Theora which is based on VP3 is actually almost impossible due to patents involved in the technology.

      so using theora for HD video is not a good idea (download and watch Big Buck Bunny in theora and H.264). But I still Love theora. :-)
      Dirac seems to be a good alternative (maybe in 2012, when the SW and HW matured)

      But VP7 kicks ass, and when the company holds all the IP rights to the product, it’s not hard to improve it ( and come up with, maybe VP10?….;-) )

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      1. “But VP7 kicks ass, and when the company holds all the IP rights to the product”

        Who says they own the IP? Just because nobody has ever sued them doesn’t mean they own the patents to VP6/7/8 codec technology. It’s nearly impossible to design a DCT-based codec without reusing technology already patented by others. Microsoft’s standardization of WMV9 into a SMPTE standard (VC-1) is a good example of that.

        The chances of Google open-sourcing VP6/7/8 codecs are highly unlikely due to legal patent challenges that would immediately follow.

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  8. if they do open souce it then it will be interesting looks like google is more interested in becoming the backbone of the internet now and is moving more and more into infrastructure
    maybe they just want to give the tools for people to build the next gen services now and that way they control the underlying channels that innovation is built upon

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  9. Om, glad to see your mention of the holistic picture of On2′s proprietary (VP6,7,8) and H.264 (Hantro) portfolio, as well as Liz’s mention of the realities surrounding the current standards-based groundswell. Since On2′s been a constant player in the embedded device space, as well as in consumer low-latency, low-power consumption, bi-directional video chat applications, I highly suspect there’s a triple-play going on here that includes Android and other mobile devices.

    While it’s too long to repost here, I commented on Dan Rayburn’s blog post on the topic, laying out Google might be doing to embrace both the open-source and standards-based communities, as part of this purchase, while keeping something for itself as an innovation barrier.

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  10. investing in a tech company requires that company to have something within it somewhere that warrants the investment. Obviously google sees something that others don’t. Whether or not it will be anything to compete with H.264 and the acceptance of that in the marketplace…only time will tell.

    M

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