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 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 (s rimm) and Apple (s aapl). 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 (s adbe) with its market-leading Flash, Microsoft (s msft) 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.
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.